📈 Palantir's Unstoppable Rise

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Good morning & Happy Friday!

Palantir just hit an all-time high, Amazon is struggling to keep up with AI demand, and Trump wants a U.S. sovereign wealth fund (but where will the money come from?). Plus, a crucial jobs report could give new insight into the economy’s resilience.

Grab your Flat White and let's get into it! ☕️👇️

Markets

‼️ What To Expect From Today’s Jobs Report
U.S. job growth likely slowed in January, but the labor market remains strong. The Bureau of Labor Statistics is expected to report 150,000 new jobs, down from December’s 256,000, according to Bloomberg and Wells Fargo. Despite high interest rates, hiring has persisted every month since December 2020, with layoffs staying low and consumer spending holding up. If forecasts hold, it would underscore the economy’s resilience even amid rising borrowing costs.

🪖 Why Palantir Stock Surged to an All-Time High on Thursday
Palantir (PLTR) stock soared to a record high Thursday, jumping nearly 10% to $111.28. The surge follows a strong AI-driven outlook, with shares more than quadrupling over the past year. Palantir led gains in the Nasdaq 100 and was among the top performers in the S&P 500, reflecting investor confidence in its AI expansion.

🤖 Amazon says it can’t keep up with AI demand
Amazon warns of potential cloud capacity constraints despite a $100 billion investment in AI and data centers. CEO Andy Jassy is pushing to make Amazon an AI powerhouse, but he cautioned that growth may be "lumpy" due to hardware delays and electricity shortages. The company is racing to maintain its dominance in cloud computing amid rising demand for AI services.

💰️ Why does Trump want a US sovereign wealth fund?
Trump ordered a plan for a U.S. sovereign wealth fund (SWF), giving Treasury and Commerce 90 days to figure it out. “We’re going to create a lot of wealth,” he declared, insisting it’s long overdue. But what exactly is a sovereign wealth fund? And more importantly, where will the money come from to set one up?

💼 What DOGE means for the job market
Even massive job losses wouldn’t shake the U.S. unemployment rate much, but some regions, like D.C., could feel it harder. The federal government employs 1.85 million people (excluding the military and USPS), and a 20% cut could put 370,000 workers out of a job. That could push unemployment to 4.3%, but with retirements and rehirings, the real impact would likely be smaller.

Defence

Is Palantir Overvalued?

Palantir Technologies (PLTR) extended its rally Thursday, surging nearly 8% as Wall Street scrambled to reassess its outlook. The stock’s momentum began earlier in the week when Palantir’s Q4 earnings shattered expectations, reporting 36% YoY revenue growth and a 99% surge in U.S. commercial deal value. The company’s AI-driven software is rapidly gaining traction, with five times more U.S. commercial customers than three years ago. Management remains highly confident in its Artificial Intelligence Platform as a key driver of future expansion.

Analysts are taking notice—Morgan Stanley, Wedbush, and Bank of America all raised their price targets, with some predicting up to 23% more upside. Wedbush’s Dan Ives praised Palantir for “playing chess in the AI arms race while others play checkers”, calling it a “transformational tech stock” reshaping the industry. However, some analysts, like those at Morgan Stanley, remain cautious about valuation, even as they acknowledge Palantir’s strong momentum.

But here’s the catch: Can Palantir’s valuation keep up with its growth? With a market cap near $190 billion, it needs to generate $86 billion in earnings by 2035—a massive leap from its current $462 million annual figure. That would require over 50% earnings growth per year, a challenge even for a dominant AI player.

Investors are also weighing the broader market dynamics. While demand for AI-driven solutions is skyrocketing, competition is fierce, and maintaining its edge will require continuous innovation and strategic execution. Palantir has successfully transitioned from a primarily government-focused business to a growing force in the commercial sector, but can it sustain its momentum long enough to justify its soaring valuation?

One thing is for certain, No matter how overvalued Palantir may seem, I wouldn’t bet against it.