Veteran stock trader's latest Palantir move turns heads

Think of two characters of the word "crisis" in Chinese—one represents danger, and the other means opportunity.

This could exactly be what a Chinese AI company has brought to the U.S. tech market.

The Chinese AI company DeepSeek just topped Apple's U.S. App Store download charts. DeepSeek's parent claims that its flagship AI model, R1, performs similarly to costly models like OpenAI with fewer resources.

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The model uses Nvidia H800, a far less expensive chip than major U.S. large-language-model builders are using.

And the DeepSeek model is open-source, enabling developers worldwide to modify it.

This has hurt major AI players led by chipmaker Nvidia (NVDA) , as the innovation threatens the demand for Nvidia's wide-margin, high-end graphics-processing units, which have been a cornerstone of its AI-driven revenue growth.

Nvidia tumbled nearly 17% on Jan. 27.

Palantir (PLTR) , an AI software that uses Nvidia's GPUs within its data analytics, was also hit by the tech selloff, down 4.5% on Monday. But this might not be all bad news.

Palantir CEO Alex Karp speaks at the Hill & Valley Forum on AI Security in Washington on May 1, 2024. Palantir is set to post its Q4 earnings on Feb. 3, 2025.
Tasos Katopodis/Getty Images

Palantir was a big winner in 2024

Palantir surged 340% in 2024, making it one of the top winners within the S&P 500 and the Nasdaq 100 indexes. The Denver company was added to the S&P 500 on Sept. 23 and the Nasdaq 100 Index on Dec. 23.

The performance was driven by the company’s expanding role in AI and increased demand for the technology and its applications.

Palantir helps governments and enterprises analyze large datasets, with major clients including the U.S. government, aerospace giant Airbus, and health-care major Merck KGaA.

In November the company posted Q3 results and guidance well above Wall Street expectations: It earned 10 cents a share, topping the 9 cents expected by the Wall Street analyst consensus. Revenue of $726 million also surpassed analysts' estimate of $701 million.

Chief Executive Alex Karp credited the performance to soaring demand for artificial intelligence.

“We absolutely eviscerated this quarter, driven by unrelenting AI demand that won’t slow down,” Karp said in the earnings release.

Palantir is set to report for Q4 on Feb. 3, 2025.

In its Q3 report the company projected revenue between $767 million and $771 million for the quarter ended in December.

Wall Street analysts are expecting earnings per share of 11 cents on revenue of $778.2 million for the fourth quarter. A year earlier, the company reported earnings of 8 cents a share on revenue of $608.4 million.

Analysts still bullish on Palantir stock

Wall Street veteran Stephen "Sarge" Guilfoyle shared his views on Palantir stock with TheStreet Pro. He'd predicted Palantir's growth as early as May 2024.

Guilfoyle's career stretches back to the 1980s on the NYSE floor. His investment style is best described as hybrid, blending economic, fundamental and technical analysis to determine which stocks are worth his hard-earned investment capital.

Guilfoyle contends that Nvidia will probably have a tough time ahead.

"Margins will undoubtedly be pressured, even if demand holds steady for the higher-end AI-capable chips," he said.

This could be a good sign for software as it means that Palantir will likely pay less for the chips it requires.

"Lower prices could bring more buyers into the AI marketplace and could lower prices for users (read that, software firms) more so than infrastructure builders (read that, high-end chip purveyors)," Guilfoyle added.

Though he sees substantial risks, Guilfoyle has added to long positions in Palantir and Salesforce (CRM) .

Wedbush analyst Daniel Ives also reiterates his confidence in AI stocks, calling the selloff a "golden buying opportunity."

“Launching a competitive LLM model for consumer use cases is one thing ... launching broader AI infrastructure is a whole other ballgame and nothing with DeepSeek makes us believe anything different,” said Ives in a research note.

More 2025 stock market forecasts

Ives has been bullish on Palantir stock. He wrote in December that Palantir could continue to be a big winner in 2025 as the AI wave shifts to software.

Palantir closed at $75.44 on Jan. 27. The stock is down 2.25% year-to-date.

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