We recently published an article titled Jim Cramer Thoughts on 8 Stocks As He Discussed Market Froth. In this article, we are going to take a look at where Palantir Technologies Inc. (NASDAQ:PLTR) stands against the other stocks.
Jim Cramer, the host of Mad Money, discussed how “froth” is currently affecting the market, explaining that trend-driven stocks need to experience a decline before more stable stocks can begin to recover.
“The fad stocks, they need to go down before non-fad stocks can triumph. That’s what’s happening. It’s just a fact of life in this business.”
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After a rough week marked by a significant downturn in trendy stocks, Cramer pointed out that it is a rare positive sign in an otherwise negative environment that the trend seems to be running its course. Cramer reflected on the market’s performance, mentioning that the Dow managed to inch up by 33 points, while the S&P 500 fell by 0.5%. However, the Nasdaq dropped by 1.21%, turning negative for the year.
He also stressed that the decline primarily occurred toward the end of the trading day, which he found unusual and concerning, though he was not sure about the specific cause of the abrupt drop. “It was pronounced, it was nasty,” Cramer remarked, highlighting the sharpness of the downturn.
“Now, nobody wants anybody to lose money, including me, but there’s a thing called froth, and we gotta talk about it as froth is the enemy of prudence. Smart investing requires a degree of prudence, something that’s highly incompatible with froth.”
He explained that smart investment strategies require a certain degree of caution, which frothy market conditions cannot support. He pointed out that for a period, the market had been filled with froth but lacked prudence, especially evident during the turbulent trading seen late last week. However, Cramer noted that as the froth subsides, investors are turning to assets with more durability and longevity. He specifically mentioned that drug stocks have been performing well recently.
“So here’s the bottom line: Once these frothy momentum stocks come in enough, then we will finally be in a much more straightforward world, a world where what tends to rally is not the sizzle, but the steak.”
Our Methodology
For this article, we compiled a list of 8 stocks that were discussed by Jim Cramer during the episode of Mad Money aired on February 24. We listed the stocks in the order that Cramer mentioned them. We also provided hedge fund sentiment for each stock as of the fourth quarter of 2024, which was taken from Insider Monkey’s database of over 1,000 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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A software engineer manipulating a vast network of code on virtual monitors.
Palantir Technologies Inc. (NASDAQ:PLTR)
Number of Hedge Fund Holders: 64
Cramer noted that Palantir Technologies Inc.’s (NASDAQ:PLTR) CEO, Alex Karp, is skilled at creating excitement around the company with his media presence. Cramer highlighted Karp’s tendency to downplay issues, like the slowdown in Europe, by blaming it on external factors.
He also mentioned Karp’s high-profile book tour, joking that he hopes Karp, like Elon Musk, can balance business with his promotional activities. He then added:
“But Palantir’s stock is getting clobbered because it just had a parabolic move and right now this data analytics company needs a huge noisy client win. Karp needs fellow promoter, Elon Musk to hire Palantir to reform the Pentagon. This stock rallied to $125 at its highest last week. It’s now at $90 and change. Is this an all the king’s horses stock? No, not at all. It’s just that something needs to happen good at Palantir, some big contracts, some big win, not just a book tour. Anything that can reset the narrative because the potty mouth, CEO is saying that, that he’s all about lethality and ontology… I’m sure that if you hire Palantir, it’s like hiring the Spartans and your company’s opponents are gonna dine in hell. Very compelling stuff but it doesn’t tell you much about the earnings power, which is what I care about.”
Palantir Technologies Inc. (NASDAQ:PLTR) creates software platforms specializing in complex data integration and decision-making, catering to both government and intelligence sectors as well as commercial clients. The company offers a range of products, including Gotham, Foundry, Apollo, and its advanced Artificial Intelligence Platform (AIP), all aimed at assisting organizations in managing and interpreting large volumes of data.
Overall PLTR ranks 6th on our list of the stocks Jim Cramer recently discussed. 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 time frame. 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.
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Disclosure: None. This article is originally published at Insider Monkey.
