Markets
markets
Matt Phillips

New high for Palantir shares

Palantir Technologies, the data mining, defense, and intelligence software firm cofounded by politically connected right-wing billionaire Peter Thiel — is on track for a new record high on Friday, suggesting either increased optimism around its earnings results due after the close of trading on Monday, or growing confidence that financial fundamentals are passé when it comes to companies close to the Trump administration. Perhaps both.

Palantir was the best-performing stock in the S&P 500 last year, rising 340.5%, a gain that’s put a valuation on the shares — price-to-sales multiple of more than 50x and a price-to-forward earnings ratio of 180x — that makes no sense according to any traditional valuation model.

In this sense, the company is a bit like Tesla, a stock that is, according to traditional metrics, so insanely overvalued as to provoke a sort of crisis in confidence among Wall Street analysts who are increasingly willing to publicly confess that they can’t understand why the shares of this faltering car company continue to rise.

For what it’s worth, the good folks over at the Financial Times seem able to see and state clearly what’s going on, at least when it comes to Tesla. It’s the politics, stupid.

The election of Donald Trump — which Elon Musk spent the relative pittance of $250 million to make a reality — coincided with an explosive move higher for Tesla shares, which can reasonably be interpreted as the market pricing in a business windfall resulting from Elon Musk is a de facto member of the administration.

Thiel — the cofounder and largest individual shareholder in Palantir — also has unusually close links to Trumpworld, having once employed the Vice President JD Vance and helped bankroll his run for the US Senate. The trajectory of Palantir likewise angled sharply higher after the election. In fact, the stock has literally doubled since November 4, the day before the vote.

From an investment perspective, this could be pretty rational, especially since the US government is Palantir’s single largest customer. From an optics perspective, though, the specter of the stock market pricing in Trump-premium for politically connected companies feels a bit grimy.

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Server stocks are rallying as Dell, Super Micro Computer, and Hewlett Packard Enterprise ride the momentum of Hong Kong-based Lenovo. The PC maker’s stock rose 19% on Friday, hitting an all-time high, on record Q4 earnings.

Powering the positive earnings report was the company’s AI-related revenue, which grew 84% in the fourth quarter and now makes up over a third of total revenue. Investors seem to think the increased demand for servers could have trickle-down effects for other companies.

“The company’s results and commentary reinforced the outlook for strong AI-infrastructure demand while indicating resilient broader traditional server and storage spending,” wrote Woo Jin Ho, a senior technology analyst at Bloomberg Intelligence. “Lenovo’s $21 billion AI-server pipeline and remarks that demand is outpacing supply support Dell’s AI-demand momentum and point to robust orders.”

AI’s insatiable computing demand is reshaping the hardware industry and driving up server demand.

Dell will report first-quarter earnings on Thursday, May 28.

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Ross Stores surges as Q1 results beat expectations, full-year guidance raised

Ross shares are rising after the company delivered strong Q1 results, with sales topping Wall Street’s projections.

The stock soared 6.3% just after the open.

Key numbers:

  • Earnings per share of $2.02 vs. $1.47 year over year (estimate: $1.72).

  • Sales of $6.01 billion, up 21% year over year (estimate: $5.61 billion).

  • Comparable sales growth of 17% (estimate: 8.58%).

CEO Jim Conroy attributed the results to better traffic in stores. “Customer traffic was the primary driver of the strong sales trend as compelling merchandise assortments, higher customer acquisition and engagement from our ongoing marketing initiatives, and an improved in‑store experience are resonating with shoppers.”

The company also noted that transaction volume grew across all key demographics, including “income levels, ethnicities, and age groups, including younger customers.” Sales were also likely buoyed by standard seasonal tailwinds, including consumer spending from tax refunds.

Backed by the strong quarter, the company lifted its full-year targets. Ross now projects same-store sales growth of 6% to 7%, up from the prior forecast of 3% to 4%, topping Wall Street’s estimate of 4.64%. It boosted its annual EPS guidance to a range of $7.50 to $7.74, versus the prior outlook of $7.02 to $7.36.

Ross Stores has been one of the retail sector’s standout performers this year, rising around 20% year to date as of Thursday’s close.

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