What happened
Palantir (PLTR 1.29%) stock is making big gains in Thursday's trading session following news that it had received new support from a prominent institutional investor. The data-technology company's stock was up roughly 13.8% as of 3:30 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index was up roughly 0.6%, and the Nasdaq Composite index was up 1.2%.
Ark Invest, which is led by founder and CEO Cathie Wood, published an update yesterday revealing that it had purchased more Palantir stock. The move followed another investment that Ark had made in Palantir on May 10 and seems to indicate that Wood is warming back up to the data-software stock.
So what
Cathie Wood has developed a reputation for backing high-risk, high-reward tech plays, and her company's banner Ark Innovation ETF is largely comprised of investments that fall into that category. While the fund saw a very tough stretch of trading in 2022, it's enjoyed recovery momentum this year, and Wood remains an influential figure on Wall Street.
Ark Invest regularly publishes updates detailing its purchases, and it revealed yesterday that it had purchased 1.26 million new shares of Palantir stock. The large majority of the new shares purchased were for the Ark Innovation ETF, but Wood's company also added roughly 201,700 shares to its Ark Fintech Innovation ETF and 149,300 shares to its Ark Next Generation Internet ETF. With a fresh vote of confidence from Wood and some positive momentum for the broader market, Palantir is posting strong gains today.
Now what
Palantir believes that it's in the early stages of capitalizing on a massive opportunity in artificial intelligence (AI). The company is rolling out its new AI platform this month, and management has been effusive about its competitive advantages in the rapidly emerging and hugely influential technology trend. The software specialist is guiding for profitability in each quarter of its remaining fiscal year, and investors are buying into the AI story and improving earnings picture.
If Palantir winds up scoring big wins in artificial intelligence, it's likely that the stock still has plenty of room to run, but the outlook on that front remains somewhat speculative. With a market capitalization of roughly $25 billion, the company is valued at approximately 55 times expected non-GAAP (generally accepted accounting principles) adjusted earnings and 11 times expected sales.
