February Fear Fest

Hello fellow investors,

February 2025 has been an absolute wild ride. We started the month with market euphoria — the Nasdaq and S&P 500 were at or near record highs, and stocks like Palantir and HIMS were flying incredibly high. At one point, PLTR was trading over $125.

But things have changed quickly. Economic fears have pulled us back quite a bit. Looking at the S&P 500 and Nasdaq charts (see below), you can see we’re experiencing some real pain.

Even BTC has dipped below $80,000 which signals we are officially in a bear market for crypto.

Not even Nvidia's stellar earnings report last week was enough to reverse the broader market’s downward trend.

Why are we falling so much?

I think it's a combination of factors causing this short-term pain and uncertainty. Let’s break them down.

1. The Tariffs

Love him or hate him, you can’t deny that Trump is an active president. Unlike his predecessor, Trump is constantly moving, negotiating, and making headlines. He’s been working to end physical wars, but he’s also potentially starting new trade wars.

His "America First" policies are spooking global markets, especially with his threats of new tariffs on the EU, Canada, Mexico, and China. If you buy imported goods from any of these places, you’re likely to pay more.

The full impact on inflation is unclear. European carmakers, for example, have spent decades preparing for these scenarios and already have manufacturing facilities in the US. That may soften the blow — but time will tell. 

2. Unemployment 

There are rumors that the job market is getting tougher, especially in tech. A lot of unemployed IT workers are saying they can’t find new roles. Personally, I think much of this is a pandemic-era correction.

During COVID, companies took federal money and went on hiring sprees, overpaying for talent and creating unnecessary roles. Now, they’re cutting the fat — letting go of non-essential employees and redundant positions.

On top of that, AI has stepped in to replace lower-end jobs. Companies no longer need to pay an analyst $100K to take meeting notes — software tools (like Microsoft's Copilot) do it better, faster, and cheaper.

What About DOGE?

There’s also concern about DOGE (Department of Government Efficiency — not the crypto!). This initiative aims to cut government jobs to reduce spending. As of November 2024, the federal government employed about 3 million people, or 1.87% of the US civilian workforce (per BLS data).

If DOGE slashes even half those jobs, that’s 1.5 million people hitting the unemployment line. That would definitely show up in the data — and freak out the markets.

3. Lingering Inflation

Tariffs could add to inflation, but domestic costs — especially groceries and insurance — remain stubbornly high.

Official data shows that US inflation edged up to 3% in January 2025, compared to 2.9% in December 2024, slightly above market forecasts. That’s not great.

• Energy costs rose 1% year-over-year (the first increase in six months)
• Used car prices rebounded
• Transportation costs accelerated (up 8%).

New vehicle prices fell, but only slightly.

All in all, this paints a picture of sticky inflation — higher prices across essential categories that make life expensive for everyday Americans. This is not great news for investors. 

4. Stagflation

Yes, this is the scary word no one wants to hear: stagflation — a toxic combo of high inflation, high unemployment, and stagnant economic growth.

I’ve personally never lived through stagflation, but if you read economic history, you’ll know it’s a nightmare scenario for both businesses and investors.

If the word starts getting thrown around more, expect even more selling pressure in the stock market.

My Take

Markets tend to be most bearish right after reaching new highs, and that’s exactly where we are.

It’s okay for the market to be skeptical right now. As Warren Buffett famously said:

"Be fearful when others are greedy, and greedy when others are fearful."

Right now, there’s fear and panic everywhere, which — to me — signals opportunity.

What This Means for Investors

Fed Rate Cuts on the Horizon?

This recent pullback might actually force the Fed's hand to cut rates again. Lower rates would be bullish for equities, especially growth stocks.

Buy the Dip?

Yes — but focus on great companies with strong revenue growth, earnings power, and expanding margins. These current prices are gifts if you’re thinking in years, not months.

Some of my personal favorites that fit this category include:

• Palantir (PLTR)
• Nvidia (NVDA)
• Tesla (TSLA)
• Apple (AAPL)
• Amazon (AMZN)
• Microsoft (MSFT)

These are all companies with strong fundamentals, long-term growth potential, and plenty of room for margin expansion.

Inflation — Don’t Trust the Noise

One final thought — a lot of inflation data comes from sentiment surveys. And I personally believe those surveys are politically polluted.

Plenty of economists with Democratic ties want Trump to fail, so inflation sentiment skews worse than reality. I don’t pay much attention to that noise.

Trump has time and has proven in the past that his unusual, often chaotic, negotiation tactics can be surprisingly effective. He also knows that for his approval ratings to stay high, he needs the market to perform well.

Final Verdict — This Is a BUY THE DIP Moment

Stay calm. Stay focused. This is what long-term investing is all about.

History shows us that the market always recovers — and this time will be no different.

"The stock market is a device for transferring money from the impatient to the patient."

— Warren Buffett

What's next for PLTR?

Hello fellow investors,

We are now post the Q4 earnings call for Palantir, and I kindly want to like to revisit a quote from my 2025 Predictions post. 

"When it was $8 a share, I told you to buy it since it was going to $100. Now that its $70, does that change that its going to go to $100?"

As I correctly forecasted, PLTR is now trading at $100 per share. A heartfelt congratulations to everyone who has been following my guidance. For those who have been with this site since 2021 and acted on my recommendations to invest in PLTR, you've likely seen returns in the (potentially hundreds of) thousands of dollars at the very least. Thank you for your engagement.

Lets take a brief look at the highlights from the earnings report. 

Impressive Numbers

The Q4 results were nothing short of phenomenal. Palantir delivered its best quarter ever, with numbers that not only surpassed all estimates but also showcased massive growth. Truly exceptional performance! Some highlights:

US Commercial growth was 64% year over year, and US Government growth was 45%. 

Customer's CIO proclaimed to have 200x efficiency gains since implementing PLTR's product, Warp Speed. 

Some clients emphasized that processes which previously required several hours and multiple people to complete can now be accomplished in just a few minutes with a single individual, thanks to Palantir's software.

Efficiency impacts came from all types of customers, even hospitals. 

What's more impressive, Palantir currently sits on $5.2 billion in cash without ANY debt whatsoever.

All in all, we witnessed substantial growth, received glowing testimonials from satisfied clients, and heard incredible praise for Palantir's software. Personally, I believe the earnings call couldn't have gone any better. The stock price reflected this climbing up $106 in Tuesday's trading session. 

So what's next?

Before we delve into the future of PLTR, I want to underscore a significant point: Palantir achieved these remarkable financial figures and growth without the existence of a marketing department. That's right—they haven't needed to actively market their products. Demand has grown organically as clients discover the transformative impacts the software has on enterprises. It's truly a dream scenario for any CEO.

Now, Wall Street has caught on and new price targets have now been updated across the industry, with guys like BOA giving them a buy rating with a $120 PT. 

Personally, I'm not focused on price targets. Palantir's success stems from its superior product that stands without competition. Given this, I anticipate even greater demand, particularly under the current Trump administration, which will drive further growth.

On the earnings call, CTO Shyam Sankar even commented on collaboration with DOGE, stating:

“DOGE is going to bring meritocracy and transparency to government. That’s exactly what our commercial business is." 

I expect Palantir to continue its growth trajectory through 2025. Are there risks involved? Absolutely. Valuations could face compression if unforeseen challenges arise, but such risks are inherent to investing in any company.

And as we are on the topic of valuations, I've repeatedly expressed my belief that Palantir is on its way to becoming a trillion-dollar company. So, what will it take to reach that milestone?

Currently, with the share price hovering around $100, Palantir's market cap stands at approximately $230 billion. To achieve a market cap of $1 trillion, the share price would need to climb to around $440. And that, my friends, is the direction we are heading towards. 

If you're considering cashing in now, by all means, go ahead—no judgment here. Enjoy the returns you've made, especially if you need the funds. However, be aware that this business is poised for continued growth.

My favorite moment from this week's earning call was when Karp said the following: 

“We are still in the earliest stage, the beginning of the first act, of a revolution that will play out over years and decades.” — Palantir CEO, Alex Karp

1 Trillion market cap by 2030. That's my prediction.

Palantir Earnings Call on February 3rd

This week was a soap opera in the markets. The whole fiasco with DeepSeek was interesting to unfold as it looks like there may have been some dishonesty on their part. Turns out yet another Chinese company (this one operated by a Chinese Hedge Fund) may have been lying to the Western media. Shocking, right? They stated their LLM cost only $6 million to develop without the use of Nvidia chips, and those claims have been disputed by American and Chinese stock analysts throughout the week. I personally am wondering if the hedge fund that created DeepSeek shorted NVDA last week prior to releasing this "news". But anyways, now the U.S. Commerce Department is looking into the matter, so some clarity will arise. 

But this DeepSeek story relates to my favorite stock, Palantir: 

The market's reaction to DeepSeek was, in my opinion, an excessive overreaction. For the past two years, Palantir's management has consistently maintained that Large Language Models (LLMs) like ChatGPT or DeepSeek would inevitably become commoditized. They assert that the real value in AI does not reside in the LLMs themselves but rather in the sophisticated software that effectively integrates these models with specific business data and workflows. This domain is precisely where Palantir excels, and their insights have proven to be spot-on. At this juncture, whether DeepSeek cost $6 million or not is immaterial, given the proliferation of available LLMs. Instead, the focus should rightly remain on Palantir's profound capabilities in this space.

Q4 Earnings Call 

Palantir Technologies is gearing up for its eagerly anticipated earnings call on Monday, February 3rd, after the market closes. The potential outcomes have sparked significant interest, with projections suggesting that stellar results could propel the stock to $100 or more, while a miss might see it drop to $60, presenting a potential buying opportunity.

In the buildup to this earnings call, there has been vigorous debate among Wall Street analysts on prominent financial networks like CNBC and Bloomberg, with many challenging Palantir's high valuation. Despite these "expert" opinions, I maintain a strong conviction in Palantir's valuation and its long-term prospects.

Regarding the upcoming earnings, I anticipate a healthy beat from PLTR, although this alone may not satisfy Wall Street's expectations. For the stock to truly surge in Monday's after-hours trading, the growth rate needs to be exceptionally high. It's widely acknowledged that the company is on an upward trajectory, but only aggressive growth figures will push the stock into triple digits this month. Whether this will occur remains to be seen. However, even if we witness slower growth and a subsequent sell-off, my stance remains bullish in the long term. 

They are on the brink of a transformative phase in its operational and strategic development, aiming to redefine its role within the tech industry over the next five years. Here's a closer look at the company's future vision, its recent advancements, and the strategic shifts that are setting the stage for its next phase of growth:

Future Vision

Palantir is set to evolve significantly over the next five years, transitioning from being a provider of standalone digital twins to a platform that connects these into an interconnected network. This will enable seamless transactions across and along supply chains, unlocking exponential operating leverage and dramatically improving financial outcomes.

This year marked a pivotal advancement with the introduction of Warp Speed in Q2 2024. This new offering—an operating system designed to enhance manufacturing efficiency—represents the first repeatable and scalable computing framework from Palantir. It enables customers to optimize their manufacturing processes across various industries. Dubbed “valuable compute,” this customized, purpose-built computation is tailored to customer needs and marks a significant shift in how computing power is utilized across sectors.

As Palantir builds out its network of ontologies, the deployment of Warp Speed exemplifies a strategic step towards creating a true network-centric approach. Palantir’s ability to deliver instances of valuable compute will boost the efficiency of any activity its customers engage in, potentially making Palantir's offerings a baseline requirement for competitiveness in various industries, much like Excel’s dominance in finance.

The Cloud Ecosystem

Palantir's evolving strategy positions it at the top of the cloud ecosystem funnel, transforming the way companies approach cloud services. Businesses are likely to start with Palantir's valuable compute as a gateway, streamlining their access to broader cloud capabilities and bypassing traditional raw compute providers like Amazon and Google.

This strategic repositioning is anticipated to mirror Microsoft’s post-Windows strategy, focusing on facilitating transactions and interactions between interconnected ontologies. With these developments, Palantir is expected to grow into one of the world’s leading computing companies, potentially reaching a market cap in the multi-trillion-dollar range.

Why Palantir Stands

Palantir is often likened to an operating system for data and global decision-making, having firmly established itself in the realm of Automated Governance. The company has revolutionized data management within large organizations by transitioning from traditional assembly-line analytics to a more dynamic, integrative model. This shift not only enhances decision-making processes but also significantly reduces inefficiencies across the board.

Analyses suggest that Palantir's strategic approach could mirror the impressive growth trajectory of Salesforce in the 2010s, which notably optimized workflows and streamlined operations. However, Palantir's strategy extends beyond corporate realms to encompass governmental structures, amplifying its impact and suggesting a potential for even greater, more sustained growth in the long term. This ambitious scaling showcases Palantir's unique market position and underscores its capability to drive profound changes in data utilization and decision-making on a global scale.

Looking Ahead..

As we approach the earnings call, the financial community is keen to assess how Palantir's strategic initiatives and market expansion efforts are reflected in its financials. With its innovative data integration and AI application, Palantir is not merely improving its own growth prospects but is also redefining industry standards for technological advancement and strategic data utilization.

The ongoing discussions about Palantir's valuation and the optimism surrounding its future are grounded in its revolutionary approach to big data and decision-making support. This earnings call will be crucial for stakeholders to better understand Palantir's current achievements, but the guidance and growth figures should be a better of indicator of where things will go as posed to the Q4 financials. 

If you're interested in learning more about Palantir and their long term vision for the industry, check out this fresh interview with the CEO which aired yesterday.