We recently published an article titled Jim Cramer’s Game Plan: 15 Stocks in Focus. In this article, we are going to take a look at where Palantir Technologies Inc. (NYSE:PLTR) stands against the other stocks.
Jim Cramer, the host of Mad Money, discussed the upcoming market and corporate activity to look forward to this week, which will be dominated by earnings reports from various companies and an important inflation report from the Labor Department.
Cramer noted that Friday marked the heavy market focus on the prospect of the White House imposing tariffs on imports from Mexico, Canada, and China. As expected, the tariffs were announced, 25% from Mexico and Canada, and 10% from China, and the market, which had already been struggling, dropped further.
READ ALSO Jim Cramer Looked Closely At These 10 Stocks and Jim Cramer’s Thoughts on These 7 Stocks
Cramer noted that the Dow plunged by 337 points, the S&P 500 fell 0.5%, and the Nasdaq declined by 0.28%. Adding fuel to the fire, President Trump later commented that he was “not concerned about the market’s reaction.” Cramer, reflecting on this, wished he could share that same sense of ease. He added:
“Finally, on Friday, we get the Labor Department’s non-farm payroll and right now the Fed is concerned that the economy might be running too hot. If we get robust job growth with higher wages, then I doubt we’ll see any rate hikes in the first half of the year.”
He then posed the question: if investors are hoping for a rising stock market, what would they want to see? Cramer explained that a job report that’s just “so-so” would be ideal, strong enough to keep rate cuts on the table, but not so strong as to hinder quarterly earnings.
“Bottom line: When you get a week that’s packed with important earnings reports and the monthly employment report plus the tariff news, you’re usually better off sitting on your hands because there’s just too much data for any individual to process even for an AI-powered individual. By the way, oh, let’s just throw in this DeepSeek stuff, which has made tech too maddening to buy or sell and too, let’s say boring. So if in doubt, do nothing.”
Our Methodology
For this article, we compiled a list of 15 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 31. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the third quarter of 2024, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A software engineer manipulating a vast network of code on virtual monitors.
Palantir Technologies Inc. (NYSE:PLTR)
Number of Hedge Fund Holders: 43
Cramer started his game plan for this week with Palantir Technologies Inc. (NYSE:PLTR) as he discussed:
“Alright, the fireworks start on Monday. Well, of course, we’ll have to worry about the fallout, right,… of the tariffs, but Palantir’s reporting after the close. Now Palantir’s a really odd duck, so we’re gonna spend a second on it. Data-driven consultant that helps everyone from packaged goods companies to the Pentagon to get more out of the resources. Right now, they’re focused on fixing the military procurement system. We give way too much business to a handful of defense contractors and it jacks up the price of all the hardware we, the taxpayers pay for.
Now Palantir’s volatile. Unabashed CEO Alex Karp is a messianic figure to some and a Pied Piper to others. He caters to his retail investor base and the stock’s a levitator. I call it GameStop with a brain. I’ve been saying it’s going to $100 ever since it was in the fifties. Now it’s at $82, shows no sign of letting up. Mark my words, a hundred dollars robust.”
Palantir Technologies Inc. (NYSE:PLTR) is a leading provider of software designed to facilitate complex data integration and decision-making, serving both government and intelligence organizations, along with commercial customers. Headwaters Capital Management stated the following regarding Palantir Technologies Inc. (NASDAQ:PLTR) in its Q4 2024 investor letter:
“More specifically for this strategy’s benchmark, the top two performing factors during Q4 for the Russell Mid Cap Index were high beta (+10.1%) and non-earning companies (+8.3%), while high return on equity was one of the worst factors (see appendix). Given the quality focus of this strategy, I am not surprised that the portfolio lagged in this market. It is déjà vu given that the portfolio’s worst quarter of relative performance was Q1 of 2021, which coincided with the top of the last speculative bubble.
Speaking of 2021, I am surprised by the market’s amnesia as it seems to be repeating similar mistakes that were made only a few years ago. The parallels to the 2021 bubble are striking. Palantir Technologies Inc. (NASDAQ:PLTR), the Russell Mid Cap Index’s largest holding and one of the poster children of the 2021 bubble, is a good example. PLTR more than doubled in Q4 entirely driven by multiple expansion, which at the end of the year, surpassed its peak achieved in Q1 2021!
Note the correlation between PLTR’s valuation and the price of bitcoin, which again highlights the broad rotation into speculative assets. Just so readers are clear, PLTR was trading at 51x SALES at the end of 2024. I don’t know much about PLTR, I’m only using this as an example. Paying that kind of multiple generally makes it difficult to achieve strong returns in the future. For example, the last time PLTR traded at this level, the stock returned -68% over the following year. I could choose plenty of additional charts like this (ARK Innovation ETF, fringe AI stocks, quantum computing, etc), but I think readers get the idea that I believe there are pockets of frothiness in the market.”
Overall PLTR ranks 1st on our list of the stocks featured in Jim Cramer’s Game Plan. While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article was originally published at Insider Monkey.
