Palantir CEO Alex Karp PLTR insane valuation

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Palantir slips under 50-day moving average amid momo reversal

What goes up doesn’t always keep going up.

9/5/25 1:11PM

Palantir shares are getting bruised by the momentum-driven sell-off washing over the stock market Friday, with its slide pushing the price well below the 50-day moving average.

In fact, Palantir is down more than 18% from the high levels it hit in early August, a drop that earlier this week forced it to cede its crown as the top-performing issue in the S&P 500 this year.

The slump Friday comes amid another down day for so-called momentum stocks. (Momentum is one of the “factors” adherents of factor investing try to manipulate to optimize their portfolios. It’s essentially a catchall for stocks that have been going up for a while.)

Palantir is one of them. The company has been one of the more remarkable investments in recent memory, rising roughly 2,000% over the last three years and creating about $340 billion in stock market wealth — with the vast majority of those gains generated over the last 12 months.

Why has it done so well?

Well, the provider of national defense data services and AI software for corporate clients is clearly a great company delivering outstanding results. (See our coverage of its most recent earnings results for example.)

In fact, its rather brash executive suite continuously touts the fact that its growth and free cash flow profitability are roughly double the so-called “Rule of 40” that the company targets as the ideal mix of growth and profit. (Jonathan Weil over at The Wall Street Journal has good explainer on the Rule of 40 here.)

But one way to interpret the recent wobble in the “software as a service” (SaaS) company’s share price is that the market is starting to question how long such high levels of growth and profitability can persist.

After all, standard economic theory suggests that high growth and high profitability act almost as the chum of capitalism, attracting the attention of would-be predatory competitors from far and wide.

How quickly that competition shows up depends on how high the barriers to entry are for others.

But as today’s big news from Broadcom suggests, even dominant players like Nvidia ultimately face competitive threats.

Surely, some investors might be considering whether companies like Palantir will face chippier competition in the future. As it turns out, they are. Reflecting such concerns, William Blair analysts wrote in a note on Friday:

“While Palantir continues to experience major momentum, some investors are concerned about how the competitive landscape evolves five years from now with OpenAI and peers rapidly raising capital, poaching talent, emulating the forward deployed engineer model, and aggressively pursuing the enterprise and defense end markets.”

Other big SaaS companies have also been elbowing into Palantir’s lane. For instance, Salesforce CEO Marc Benioff recently talked up his compay’s ability to snatch an Army contract from Palantir, telling CNBC:

“We had a tremendous success against Palantir, because, by the way, our prices are just so much lower,” Benioff said. “We’re offering a very competitive product as a much lower cost.”

That doesn’t mean Palantir is poised to have its lunch eaten by competitors any time soon. But even a modest reduction in a company’s growth and profit trajectory can have an outsized impact on a stock like Palantir, which, even after the recent sell-off, remains insanely richly valued.

Nor does it mean that Palantir’s share price is doomed to fall from here. We saw a very similar sell-off in momentum shares set in back in February that stretched through April, before retail traders rushed in to buy the dip and realize strong gains as the market recovered in the following months.

But it stands to reason that if the risks of competition are starting to creep into the minds of investors, that could be an important — and perhaps overdue — shift in the psychology of traders away from gauzy fantasies about a highly profitable AI future inevitably dominated by today’s market leaders like Nvidia and Palantir.

And if investors are starting to think about pesky considerations like competition, it might (might!) complicate the knee-jerk, buy-the-dip momentum trading dynamic that’s been so important to the market’s resilience over the last year.

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Luke Kawa8m

This chart shows how Donald Trump is the king of stock market volatility

Well, here is an absolute banger of a chart from Fundstrat that is sure to simultaneously please and annoy everyone:

Macro data scientist Alex Wang’s chart on the causes of the five best and worst market days during different presidencies demonstrates how much the Oval Office drives US stock market volatility during Trump’s second term in office.

Fundstrat up and down days by presidency

My very loose, abstract description of what policymakers do is “try to make things better.” (As for what constitutes “things” and “better,” well, tens of millions of Americans will have to agree to disagree.)

Most of the time, these things the president and Congress pursue are not a massive shock to the financial system, though there’s always a doomsayer warning that something like Obamacare will spell the end for US stocks. And that means most of the time you can probably expect a positive skew: policymakers will be coming in with stimulus to support the economy and markets in the face of unexpected downside.

Per Fundstrat’s analysis, that clearly hasn’t been the case in the past 15 months. You can look at this one of two ways. Perhaps this period has been a time of such economic stability and impressive earnings growth that some of those other catalysts for massive one-day drops haven’t materialized. We’re blessed to have gotten to enjoy such a solid backdrop! Or you could suggest this is indicative of a fundamentally more activist presidency and more frequent policy decisions that have carry higher macroeconomic consequences compared to previous presidencies. We’re doomed to swing wildly based on what we see next on Truth Social!

There’ve been a lot of wonderful studies released by asset managers on the importance of not missing the 10 best days in the market in any given year. (It’s less often mentioned by folks who have a vested interest in you investing your money about how much better returns would be if you miss the 10 worst days of the year!) The problem is these sessions are typically clustered so close together that it’s an impossible task to navigate twisted, volatile waters so cleanly.

The upshot: Trump-induced volatility has been noise, with the biggest five losses nearly perfectly canceling out the biggest gains. There’s an underlying non-Trump, mainly-AI trend that’s mattered, and that’s probably the main reason the US stock market is where it is.

$1B ⛽

Max Knoblauch45m

Rising fuel prices are set to cost Southwest Airlines $1 billion in the second quarter, the carrier said in its investor call on Thursday morning. The airline, which stopped fuel hedging last year, has been rocked by higher prices amid the war in Iran along with the rest of the industry.

“Clearly revenues, and therefore fares, are underneath the increase in fuel. So we’ve not caught the increase in fuel by any any stretch of the imagination,” CEO Bob Jordan said.

Despite its fuel expense, Southwest said its earlier forecast of full-year earnings of $4 per share — which would be more than 4x its 2025 profit — could still happen. When it reported earnings after the bell on Wednesday, the airline declined to update the forecast given “ongoing macroeconomic uncertainty.”

“There are scenarios where absolutely we could still hit the $4. It depends on, you know, fuel and revenue trends from here. We just felt like it was not productive to introduce a new guide or a range, given how volatile fuel is,” Jordan said.

Luke Kawa2h

ServiceNow’s guidance shows that there’s no margin for error in software shortfalls

Why do investors like software stocks? Because they have high recurring revenues and extremely high margins.

Why are investors worried about the impact of AI on software stocks? At the most basic level, AI tools reduce the barriers to entry and the cost of creating software.

Nothing shows traders’ willingness to shoot first and ask questions later (or not bother to ask questions at all!) when the crux of the case for owning software seemingly shows cracks more than the reaction to ServiceNow’s Q1 results and updated outlook.

ServiceNow is cratering after the software company’s Q1 margins came in shy of estimates. Full-year guidance for ServiceNow’s gross and operating margins was revised lower, while subscription revenues got a big bump.

There are some extenuating circumstances that cut both ways: integrating recently acquired businesses is the proximate cause of the expected sales bump and operating margin pressure, according to management.

But given how important margins have been to the investment case for software stocks — and the significant profitability premium they’ve enjoyed relative to the S&P 500 as a whole — details don’t seem to matter.

In early February, Nvidia CEO Jensen Huang called the idea that the software industry would be replaced by AI the “most illogical thing in the world,” arguing that AI agents will leverage existing software tools rather than reinvent them.

(For what it’s worth, my view is that if AI is intelligent in a transcendent way, then reinventing the wheel is absolutely something you should expect. If AI is just fishing in the ocean of human consciousness with the best net possible, then it may work within our existing toolbox. I’m thinking about the story of why it took so long to develop a sewing machine — inventors were trying to mimic the motion of sewing by hand rather than taking a novel mechanical approach.)

But I digress. The bear case for software is that AI tools render many established giants obsolete. But going the way of the woolly mammoth isn’t something that happens overnight. You won’t be able to find any of them to ask, obviously, but I’m told it was a 10,000- to 16,000-year process.

Well before obsolescence comes the threat of incremental substitution. And margin pressure would be one way you’d expect competitive pressures to be absorbed. At the surface level, ServiceNow is affirming a base case for software stocks that traders have spent months fearing, which still apparently hasn’t taken the industry to levels where it’s viewed as attractively valued.

ServiceNow’s woes are dragging the entire software sector down

Matt Phillips3h

Oklo says it’s partnering with Nvidia, sending the stock up

Oklo shares were up in early Thursday trading after the revenue-free retail favorite announced a collaboration between itself, Los Alamos National Laboratory, and Nvidia “to support critical infrastructure development and accelerate the deployment of nuclear energy.”

Oklo said in its press release:

“Projects under the agreement include integrated full-stack solutions to support nuclear powered AI factories; AI development, including physics and chemistry trained AI models to support nuclear fuel R&D; grid stabilization, reliability, and redundancy studies; materials science efforts focused on plutonium-bearing fuel; and proof of concept work related to the development of a nuclear powered AI factory.”

The release leaves several questions about the agreement between Oklo, Nvidia, and the storied federal nuclear research center unanswered, including which entity, if any, is providing funding, and a timeline for the research to begin or yield possible useful findings. Sherwood News has reached out to Oklo for comment and will update with any additional information.

Oklo’s shares have been ripping lately. They’re up more than 8% in Thursday morning trading, pushing their gains so far this month to more than 50%.

That surge — in shares of a company with no commercially available products and no revenue — is part and parcel, after a few weeks of war-related jitters, of the return of the speculative appetite we saw last fall.

Oklo, NVIDIA, and Los Alamos National Laboratory Collaborate to Advance Nuclear Fuel Validation at Los Alamos in Support of Nuclear-Powered AI Factories

“Projects under the agreement include integrated full-stack solutions to support nuclear powered AI factories; AI development, including physics and chemistry trained AI models to support nuclear fuel R&D; grid stabilization, reliability, and redundancy studies; materials science efforts focused on plutonium-bearing fuel; and proof of concept work related to the development of a nuclear powered AI factory.”

Oklo’s shares have been ripping lately. They’re up more than 8% in Thursday morning trading, pushing their gains so far this month to more than 50%.

Hims rises after it says it now offers “full range” of FDA-approved GLP-1s

Hims providers can now send prescriptions to Eli Lilly’s direct-to-consumer pharmacy.

J. Edward Moreno3h

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