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What Happened?
Shares of data-mining and analytics company Palantir (NYSE:PLTR) jumped 5.6% in the morning session after Wedbush analysts reaffirmed their Buy rating, suggesting they were unshaken in their resolve, despite the company surrendering most of its post-earnings (Q4 2024) stock gains amid worries about government budget cuts. The analysts highlighted Palantir's ability to win a bigger share of the remaining pie, citing its AI capabilities and involvement in key military projects.
The shares closed the day at $83.53, down 1.6% from previous close.
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What The Market Is Telling Us
Palantir’s shares are extremely volatile and have had 32 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 7 days ago when the stock dropped 11.6% on the news that markets continued to struggle following the broad selloff triggered by weak economic data in the previous week. On Friday, February 21, 2025, the S&P 500 dropped 1.7%, and the Nasdaq fell 2.2% after PMI numbers showed the U.S. services sector contracted, and the University of Michigan's consumer sentiment index came in below expectations.
Adding to Wall Street's anxiety, rumors swirled that Microsoft was trimming its forecasts on data center projects, raising concerns that AI-related investments may get a little too bloated.
TD Cowen analyst Michael Elias flagged three key findings from his research. He noted that Microsoft "1) cancelled leases in the U.S. totaling 'a couple of hundred MWs' with at least two private data center operators, 2) has pulled back on the conversion of SOQ's to leases, and 3) has re-allocated a considerable portion of its international spend to the U.S."
Jefferies analysts saw this as more of a regional spending adjustment, noting that Microsoft executives "strongly refute" any major shift in their data center strategy.
Palantir also has the not much-coveted title of being the most "expensive stock in the S&P 500," raising concerns about a potential pullback.
Adding to investor unease, CEO Alex Karp recently introduced a new stock plan that could significantly increase the share count, potentially diluting existing shareholders. With so many moving pieces, investors are bracing for a volatile week ahead, while hoping for clarity.