Palantir's AI Revenues Surge, Data Centers in Space, Surprise Pick Up in Manufacturing, US-India Deal

AI Revenues

Please click here for an enlarged chart of Palantir Technologies Inc (NASDAQ:PLTR).

Note the following:

The chart shows the jump up in PLTR stock on earnings.
RSI on the chart shows PLTR stock is not overbought even after the jump and has room to run.
The chart shows that prior to earnings PLTR stock had fallen. This drop was due to software stocks in general falling, as represented by iShares Expanded Tech-Software Sector ETF (BATS:IGV). Our readers have known since 2022 that AI would disrupt many software companies. The stock market has only recently been catching on to the disruption. The paradox here is that Palantir sells only AI software and is not going to be disrupted. Yet, Palantir stock has fallen along with other software stocks. The reason is PLTR stock is very expensive, and as the PE multiples of other software stocks come down, they also bring down Palantir's valuation.
The chart shows that now is the third time PLTR stock is bouncing from the top band of zone 1 (support). This is the hallmark of a very strong stock.
Palantir earnings were significantly above consensus and whisper numbers. Here are the noteworthy points:
- Palantir sees Q1 revenue of $1.532B – $1.536B vs. $1.33B consensus.
- Palantir sees FY26 revenue of $7.182B – $7.198B vs. $6.28B consensus.
- In Q4, Palantir revenue growth rate was 70% year-over-year, the highest ever.
Prudent investors should note that the rise in PLTR stock is mostly due to momo crowd buying. This increases the risk.
As full disclosure, PLTR is in our portfolio and we are long from an average of $20.15.
In a noteworthy development, Teradyne Inc (NASDAQ:TER), with business in semiconductor testing, product testing, and robotics, reported blow out earnings. The demand is being driven by AI. As full disclosure, there will be signals from us on TER and its competitors when appropriate.
Elon Musk is merging SpaceX with xAI. This is creating a lot of excitement for the upcoming SpaceX IPO. SpaceX will become the largest vertically integrated AI company. In our analysis, SpaceX has the potential to become the most valuable company in the world if it succeeds with AI data centers in space. SpaceX is seeking permission from regulators to launch 1M satellites.
ISM Manufacturing Index released yesterday came at 52.6% vs. 48.3% consensus. This was a surprise expansion of manufacturing in the U.S. The data triggered heavy buying in stocks. In yesterday's Morning Capsule, we wrote:

The reason is market maker positions now have negative gamma. In plain English this means when silver, gold, or the momo crowd’s favorite tech stocks start going up, market makers will be forced to buy.

Once the buying came in due to ISM Manufacturing data, due to market maker positioning with negative gamma, the stock market went higher.
In the afternoon blind money came in. Blind money is the money that flows into the stock market on the first two days of the month without any analysis or regard for market conditions. Blind money will continue flowing into the stock market this afternoon.
JOLTS job openings data is delayed.

India

President Trump and Prime Minister Narendra Modi have reached an agreement. President Trump is cutting tariffs from 50% to 18%. India will buy oil from the US and Venezuela and stop buying oil from Russia. Tariffs on India are lower than tariffs on Pakistan, Bangladesh, and Vietnam. This will help traditional Indian exports.

Stocks in India surged 2%. For the long term investor, India is the best growth opportunity among large economies. We have covered India for 19 years continuously. Of note is a special situation in an India-focused fund Fairfax India Holdings Corp (OTC:FFXDF). The fund was founded by Prem Watsa, also known as the Warren Buffett of Canada. As full disclosure, FFXDF position in our portfolio has nice gains. There are also trade around positions on FFXDF and WisdomTree India Earnings Fund (NYSE:EPI). Trade around positions are a technique used by billionaires and hedge funds to dramatically increase returns and reduce risk.

Magnificent Seven Money Flows

Most portfolios are now heavily concentrated in the Mag 7 stocks. For this reason, it is important to pay attention to early money flows in the Mag 7 stocks on a daily basis.

In the early trade, money flows are positive in Amazon.com, Inc. (NASDAQ:AMZN), Alphabet Inc Class C (NASDAQ:GOOG), NVIDIA Corp (NASDAQ:NVDA), and Tesla Inc (NASDAQ:TSLA).

In the early trade, money flows are neutral in Meta Platforms Inc (NASDAQ:META).

In the early trade, money flows are negative in Alphabet Inc Class C (NASDAQ:GOOG) and Microsoft Corp (NASDAQ:MSFT).

In the early trade, money flows are positive in SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust Series 1 (NASDAQ:QQQ).

Momo Crowd And Smart Money In Stocks

Investors can gain an edge by knowing money flows in SPY and QQQ. Investors can get a bigger edge by knowing when smart money is buying stocks, gold, and oil. The most popular ETF for gold is SPDR Gold Trust (GLD). The most popular ETF for silver is iShares Silver Trust (SLV). The most popular ETF for oil is United States Oil ETF (NYSE:USO).

Gold

Gold and silver had become very oversold. Oversold markets tend to bounce, and that is exactly what is happening in gold and silver. Some of the buying is a result of momo gurus using conspiracy theories and the momo crowd falling victim to momo gurus. There is aggressive momo crowd buying in SPDR Gold Trust (NYSE:GLD) and iShares Silver Trust (NYSE:SLV).

Bitcoin

Bitcoin (CRYPTO: BTC) is seeing buying from very oversold conditions.

What To Do Now

Consider continuing to hold good, very long term, existing positions. Based on individual risk preference, consider a protection band consisting of cash or Treasury bills or short-term tactical trades as well as short to medium term hedges and short term hedges. This is a good way to protect yourself and participate in the upside at the same time.

You can determine your protection bands by adding cash to hedges. The high band of the protection is appropriate for those who are older or conservative. The low band of the protection is appropriate for those who are younger or aggressive. If you do not hedge, the total cash level should be more than stated above but significantly less than cash plus hedges.

A protection band of 0% would be very bullish and would indicate full investment with 0% in cash. A protection band of 100% would be very bearish and would indicate a need for aggressive protection with cash and hedges or aggressive short selling.

It is worth reminding that you cannot take advantage of new upcoming opportunities if you are not holding enough cash. When adjusting hedge levels, consider adjusting partial stop quantities for stock positions (non ETF); consider using wider stops on remaining quantities and also allowing more room for high beta stocks. High beta stocks are the ones that move more than the market.

Traditional 60/40 Portfolio

Probability based risk reward adjusted for inflation does not favor long duration strategic bond allocation at this time.

Those who want to stick to traditional 60% allocation to stocks and 40% to bonds may consider focusing on only high quality bonds and bonds of five year duration or less. Those willing to bring sophistication to their investing may consider using bond ETFs as tactical positions and not strategic positions at this time.

The Arora Report is known for its accurate calls. The Arora Report correctly called the big artificial intelligence rally before anyone else, the new bull market of 2023, the bear market of 2022, new stock market highs right after the virus low in 2020, the virus drop in 2020, the DJIA rally to 30,000 when it was trading at 16,000, the start of a mega bull market in 2009, and the financial crash of 2008. Please click here to sign up for a free forever Generate Wealth Newsletter.

Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga’s reporting and has not been edited for content or accuracy.