Why Shares of Palantir Are Rising Today After a Big Losing Streak

Key Points

• There is no obvious reason behind the move.

• Most stocks are rallying today after Federal Reserve Chair Jerome Powell hinted at a September interest rate cut in a speech this morning.

• 10 stocks we like better than Palantir Technologies ›

Shares of the artificial intelligence decision-making company Palantir (NASDAQ: PLTR) traded nearly 2.3% higher as of 2:37 p.m. ET today, after being up as much as 4.5% earlier today. There is no obvious reason behind the move, but it is likely being driven by the broader-market rally.

Coming off a big losing streak

Palantir stock has seemingly been invincible. It's up over 1,600% in the past five years and over 110% this year. But the stock has struggled as of late. It was on a six-day losing streak until yesterday when it managed to eke out a marginal gain.

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Image source: Getty Images.

Today, Palantir appears to be rallying along with the broader market. This morning, Federal Reserve Chair Jerome Powell hinted at the possibility of the Fed lowering interest rates at its upcoming September meeting, igniting a ferocious rally. As of this writing, the Dow Jones Industrial Average had rocketed 850 points higher, while the S&P 500 was up over 1.5%.

Palantir's artificial intelligence data capabilities have gained traction among many government departments and many commercial businesses, but some analysts simply think the stock has run too far too fast. Citron Research's Andrew Left, a famous short-seller, recently said on Fox Business that the stock is way overvalued.

"It's a wonderful company, but if this was the greatest company that was ever created and we gave it the same multiples, let's say Nvidia in 2023, the stock still can get cut by two thirds. And that would be like 35 times sales," he said.

Investors have gotten ahead of themselves

I agree with Left. Palantir is clearly resonating with its customers and has tremendous potential, but every asset has a value. Even after the recent sell-off, Palantir trades at 245 times forward earnings. I would wait for much better entry points.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.