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Palantir Shares Tumble Over 13% Despite Revenue Beat and Upgraded Forecast

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Palantir Technologies (PLTR.O) saw its stock plunge more than 13% on Tuesday, as investors reacted negatively to quarterly results and a raised full-year forecast that fell short of Wall Street’s elevated expectations. This comes after the stock had soared 63% year-to-date, following a quadruple gain in 2023, driven by optimism around its AI capabilities and government contracts.

The Denver-based data analytics firm reported first-quarter revenue of $883.9 million, a 39% year-over-year increase, and above analyst expectations of $862.8 million, according to LSEG. U.S. government revenue surged 45%, highlighting continued momentum in federal and defense sectors.

Despite the beat, analysts say the market had already priced in strong performance, leaving little room for upside. “We believe we have reached a point where respectable earnings beats and raised guidance aren’t enough to materially move the stock to the upside,” said Morningstar analyst Mark Giarelli.

Palantir now forecasts 2024 revenue between $3.89 billion and $3.90 billion, up from the prior estimate of $3.74 billion to $3.76 billion. The company also noted a record number of $1 million+ deals, with strong customer growth in U.S. commercial sectors such as healthcare, energy, and automotive.

However, valuation concerns are mounting. Palantir’s 12-month forward P/E ratio stands at 202.07, significantly higher than that of industry peers like Snowflake (131), Datadog (54.81), and Salesforce (23.48). If the stock decline holds, the company is poised to shed over $40 billion from its $292 billion market cap.

Despite the sell-off, at least nine brokerages raised their price targets for Palantir post-earnings, pushing the median target to $96.46 — a sign of continued long-term confidence in the firm’s AI-driven growth.

Hedge Funds Rapidly Exit Tech Stocks Ahead of U.S. Tariff Deadline, Goldman Sachs Reports

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Hedge funds have been unloading tech stocks at their fastest pace in six months, marking the largest tech-sector exodus in five years, according to a Goldman Sachs note released Friday and seen by Reuters on Monday. The move comes just ahead of the April 2 tariff deadline announced by U.S. President Donald Trump, which has sparked widespread market uncertainty and fears of an economic downturn.

According to Goldman Sachs’ prime brokerage desk — which tracks hedge fund activity — the information technology sector, including the “Magnificent-7” tech stocks, was “by far the most net sold” last week. Both long positions (bets that prices will rise) and short positions (bets on a decline) in tech stocks were rapidly closed, reflecting a strong pullback across the board.

Analysts at Edmond de Rothschild linked this abrupt sell-off to the anticipated tariffs on copper and other raw materials, which are expected to weigh heavily on tech manufacturers and AI-related hardware producers.

A separate note from Morgan Stanley revealed that hedge funds are increasingly betting against some of the sector’s biggest names. Nvidia, AMD, and Tesla were identified as the top three short positions as of Wednesday.

Goldman said that around 75% of last week’s hedge fund selling activity was concentrated in U.S. tech stocks, particularly those connected to AI hardware development. Total hedge fund exposure to tech is now at a five-year low, despite heavy buying just a few weeks ago in mid-March.

Another dataset from JPMorgan noted a reversal of positions by hedge funds last week, possibly influenced by strong retail investor activity. This surge in retail buying may have triggered a short squeeze, forcing some bearish investors to unwind their positions as stock prices climbed unexpectedly.

“With the tariff news, it was interesting that hedge fund flows and positioning might suggest they’re already somewhat prepared—at least in terms of key areas that have been in focus,” said JPMorgan in its client note.

As the April 2 deadline looms, hedge funds appear to be bracing for volatility, shifting away from one of the market’s most lucrative sectors in recent years.

Amazon’s Cloud Business Faces Crucial Test After Rivals Microsoft and Google Struggle

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Amazon is under intense pressure as it prepares to report its fourth-quarter results on Thursday, with high expectations surrounding its cloud business amid growing concerns over Big Tech’s investments in artificial intelligence (AI). After disappointing earnings from Microsoft and Google, which fueled investor concerns about the costs of AI, Amazon’s performance could be a pivotal moment in the tech sector.

Shares of major tech companies surged in recent years, driven by the belief that the AI boom and its massive data center needs would sustain growth. However, these expectations were rattled when DeepSeek, a Chinese AI startup, announced breakthroughs at a fraction of the cost, causing a selloff in tech stocks.

Despite these challenges, Amazon may be in a stronger position than its rivals, analysts say. Amazon Web Services (AWS), the world’s largest cloud services provider, is poised to report a 19.3% revenue growth, its highest increase in eight quarters. The company is also expected to benefit from its early embrace of DeepSeek’s AI models and plans to release its generative AI voice service, Alexa, later this month.

While Microsoft and Google face slowing cloud growth, Amazon has maintained optimism about its cloud business. Some analysts believe that Amazon has regained ground in the AI race, thanks to its increased investment in companies like Anthropic and a broad selection of AI models available through AWS. “We believe AWS is regaining share,” said Gil Luria, an analyst at D.A. Davidson, highlighting Amazon’s strength in AI despite initial slower growth compared to Microsoft and Google.

Amazon’s valuation remains higher than its competitors, with a forward price-to-earnings ratio of nearly 39, compared to Microsoft’s 29 and Alphabet’s 22.4. This strong position could help Amazon surpass market expectations and emerge as a leader in the AI-driven cloud market.

In addition to its cloud growth, Amazon is benefiting from a strong retail performance. Analysts expect Amazon’s North American sales to rise 9% in the fourth quarter, fueled by a successful holiday shopping season. Increased consumer spending, particularly in e-commerce, and Amazon’s expansion into groceries, pharmacy, and fashion are expected to propel its growth in the retail sector.

With a favorable holiday season and a competitive edge in AI, Amazon’s upcoming report could restore confidence in the tech giant, positioning it for long-term success.