Cathie Wood, the popular investor and CEO of ARK Investment Management recently took notice of Palantir Technologies and purchased additional $4million of its stock. ARK Invest has a history with Palantir, investing in their stocks from 2020 to 2022, suggesting that this new purchase implies long-term potential. But is following Wood’s lead now the right move?
Palantir Technologies is a data and analytics company based in Palo Alto that primarily serves government and corporate clients. It has a specialized Artificial Intelligence Platform (AIP) which enables users to apply their language models in customisable ways. In the first quarter of 2023, Palantir’s revenue exceeded $525million, which marked its second consecutive quarter of profitability GAAP. This good news is reflected in its stock, showing an 87 per cent increase year to date on May 24th.
Investing in Palantir at this time hinges on their potential to appeal to the AI market. So much of the recent interest in Palantir can be attributed to the growing public interest in AI. It’s clear that AI is a huge area of potential growth for businesses and Palantir’s AIP highlights their strength in this sector. CEO Alex Karp has emphasised the demand for AIP and the value it can add.
Would-be investors should bear in mind the current economic uncertainty which means Palantir stock prices have had large swings this year. To minimise the risk of your stock performing poorly shortly after purchase, it is best to invest consistently and spread out your investment amount. The way to achieve this is to dollar-cost average your way into it. For example, with a $1000 investment, divide it into four purchases of $250, rather than putting it all in the one purchase.
Overall, by studying the longterm benefits and trends of AI, investors may potentially benefit from investing in Palantir, although it can be a risky move. It is important to do your own research and make sure you are comfortable with the rise and fall of stock prices, before investing.
