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In our latest analysis, we explore the position of Palantir Technologies Inc. (NASDAQ:PLTR) in the context of recent stock discussions by Jim Cramer, particularly following his insights on rising bond yields.
During a segment on CNBC’s Squawk On The Street, Cramer addressed the performance of quantum computing stocks that surged after a major tech company introduced its Willow quantum computing chip. He referred to a quote from AI CEO Jensen Huang, emphasizing the limitations of quantum computing technology, particularly its dependency on small form factors and its ineffectiveness for applications like autonomous driving. Cramer articulated concerns, stating, “This technology is currently not suitable for larger applications, which limits its immediate utility.”
Cramer was outspoken in his criticism of quantum computing equities. He cited the QTUM ETF as lacking genuine quantum computing investments, despite its inflated market value. He suggested that while some projects, like Willow, have merit, many companies in the quantum space lack substantial revenue and are experiencing significant financial losses. He described these stocks as “chimerical,” indicating they resemble illusions devised to attract investment without real grounding in profitability.
In addition to quantum computing, Cramer expressed skepticism towards the nuclear power sector, asserting that the slow construction of plants and budget overruns present severe challenges. He cautioned that these industries require careful scrutiny before any optimism can be justified.
Cramer also commented on the rising treasury yields, noting their dramatic increase during the trading day. He received feedback from futures markets indicating a volatile atmosphere, leading to concerns that excessive focus on bond yields could mislead investors, potentially pushing them to unrealistic conclusions.
The Federal Reserve has also played a pivotal role in shaping market dynamics. Following its updated interest rate projections in mid-December, fears mounted among investors regarding the possibility of only modest rate cuts in 2025. Cramer remarked on the frequent commentary from Fed officials, suggesting that their continuous speaking could lead to public confusion rather than clarity.
Cramer drew attention to the severe wildfires in California, recounting his experiences as a reporter covering such disasters. He highlighted the unpredictable nature of these fires, describing them as highly volatile and capable of rapid expansion in the right conditions. “These are not your typical wildfires; they can leap unexpectedly, creating chaotic situations,” he remarked.
Despite challenges, Cramer speculated about a possible decline in bond yields, sharing that many in the bond market are eager for the prevailing ten-year yield to hit 5%. He indicated that strong demand exists for bonds at this yield level as investors await favorable market conditions.
Our Methodology
The stocks mentioned in Cramer’s discussions were compiled from his recent Squawk on the Street appearance, and we examined their hedge fund investment status. This approach helps to identify potential investment opportunities, as data suggests that tracking hedge fund strategies may yield favorable results. Our quarterly newsletter has consistently provided a rich selection of small-cap and large-cap stocks, showing significant returns over the years.
Analyzing Palantir Technologies Inc. (PLTR)
Hedge Fund Interest in Q3 2024: 43
Palantir Technologies Inc. (NASDAQ:PLTR) has gained significant traction in 2024, with a share price increase of over 350% driven by strong earnings growth within the U.S. commercial sector and optimism regarding AI service opportunities for the government. Cramer has endorsed the company and its CEO, Alex Carp, noting his recent acquisition of a biography on Carp, although he humorously pointed out its brevity.
Within our analyzed stocks, PLTR ranks 13th among those discussed by Cramer. While Palantir shows promise, we assess that other AI-related stocks might offer better investment opportunities with the potential for quicker returns. For those interested in undervalued AI stocks trading under five times earnings, there is additional insight available in our report.
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Disclosure: None.
Source
finance.yahoo.com