The financial markets are eagerly awaiting Palantir Technologies’ (NYSE:PLTR) quarterly earnings report today to assess whether the recent surge in the company’s stock price is justified by the hype surrounding its artificial intelligence (AI) products. The company’s shares have soared over 180% this year and more than 135% since its last earnings report three months ago. During the previous report, CEO Karp enthusiastically promoted the company’s AI offerings and their robust demand, leading to a significant influx of investors and a retreat of short sellers. CEO Karp even expressed doubts about selling certain AI developments to clients, given their extraordinary power.
Despite Palantir Technologies (NYSE:PLTR) reaching a 20-month high last Tuesday, many analysts remain skeptical about the AI hype surrounding the stock. According to Bloomberg data, sell ratings for the stock outnumber buy ratings by a ratio of two to one. Roundhill Financial voiced concerns about the unproven nature of much of Palantir’s AI technology, asserting that companies involved in AI must demonstrate greater progress to justify their valuations.
With the recent rally elevating Palantir Technologies’ valuation to 16 times projected sales, the focus is now on the company’s earnings results to sustain the current momentum. Jeffries LLC raised questions about Palantir’s pricing strategy for its AI products, which have not been properly addressed in the previous earnings reports.
The surging stock price has prompted short sellers to cut their losses, with S3 Partners LLC reporting paper losses of approximately $1.7 billion. Short interest as a percentage of shares available to trade declined from a peak of 9% in May to about 7%. Palantir Technologies’ last earnings report in May surprised investors with a profit in Q1 and an optimistic outlook for profitability throughout 2023, potentially marking the company’s first profitable year.
While some analysts view Palantir Technologies (NYSE:PLTR) as a promising long-term AI investment, concerns linger about the company’s pricing strategy and the unproven nature of its technology. Palantir has been involved in government and corporate sectors, providing services for analyzing sensitive information like criminal databases, DMV records, and phone data to facilitate decision-making. Mahoney Asset Management emphasized the company’s extensive experience since 2004 and its reputable government contracts as indicators of quality products and services.
Featured Image: Freepik @ freepik
Author Faith Yakubu 
