Software firm Palantir (PLTR) staged a stunning rally that shook up bears. PLTR stock rose by nearly 40% last week, squeezing shorts who hold a small 3.54% short float.
Palantir posted revenue growing by 93% Y/Y, where commercial revenue growth topped 149% Y/Y. The company is expecting Q3 revenue of between $2.16 billion and $2.164 billion. Despite the firm pulling one of its frontier models, markets did not punish the stock. Instead, shareholders were bullish that the company’s growth will continue.
Margin headwind risks remain. Gross margin adjustments addressed higher costs related to cloud hosting with one of its government customers. Still, prices might moderate.
In the chip sector, Nvidia (NVDA) jumped to erase the recent drop from around $210 to $190. It closed at $223.96 after SpaceX (SPCX) said that it would use Nvidia’s GPUs exclusively. The announcement should not surprise markets. AI builders prefer Nvidia’s proprietary CUDA model over that of Advanced Micro Devices (AMD).
In a recent 4-day rally that ended August 5, Nasdaq (QQQ) added $3.5 trillion in market capitalization. Sentiment unexpectedly reversed to optimism when Microsoft (MSFT) and Amazon (AMZN) posted strong server revenue results. The mega-cap firms also reaffirmed plans to hold or even increase their capital expenditure for AI-related hardware.
Coherent (COHR), Lumentum (LITE) and Ciena (CIEN) also rose. AI servers need optical networks to operate effectively.
