Shares of high-flying AI software firm Palantir (NASDAQ:PLTR | PLTR Price Prediction) have been one of the most heated names in the market in recent years. More recently, the name has become that much choppier, with shares plunging more than 18% way back in August following a good, but certainly not impressive, round of quarterly results. After a strong late-October surge as we head into the peak of the latest earnings season, the name finds itself flirting with new all-time highs again.
And while shares are as pricey as ever following the latest round of AI partnership news (a new one with data warehousing firm Snowflake (NYSE:SNOW) and the expansion of the Lumen Technologies (NYSE:LUMN) collab), things are sure to get a whole lot more turbulent as we enter the month of November, with the firm poised to pull the curtain on its latest quarter in the first trading day of the new month.
Palantir stock is really heating up again. But its looming earnings could be make or break
There’s no doubt that expectations are high. After all, Palantir stock is one of the most expensive names I can think of. Either way, the $449 billion AI software firm has become quite a behemoth after rallying by almost 1,200% in two years. While I do expect Palantir to clock in some pretty strong results, I can’t say I know how the market will react to them.
There’s a good chance that the expectations bar has been raised to such a height that even a spectacular quarter might not be even to power a significant reaction. In a prior piece, I praised the Snowflake-Palantir partnership and thought it would act as a significant catalyst to onramp new customers. In the meantime, the latest quarterly earnings results look like they could be a nail-biter, especially given the explosive 24% move off those September lows.
As a name I have a hard time valuing, I’d much rather wait for a pullback in the stock before even thinking about nibbling. Perhaps such an opportunity will present itself after earnings. In the meantime, there are other hyper-growth plays that trade at valuations that are easier to get behind. And in this piece, we’ll go over two.
Snowflake
With a fantastic partnership in place with Palantir, I do think that more hype surrounding the AI software juggernaut could spread to shares of SNOW. Of course, Snowflake shares have been incredibly hot, soaring more than 126% in the past year alone. However, the data warehousing firm, which has become more of an AI data cloud company following impressive AI-first product releases under the leadership of its new CEO, is still relatively small with a mere $90 billion market cap, with ample ground to gain as it acts as a massive AI enabler across corporate America.
Perhaps Wedbush Securities’ Dan Ives put it best: Snowflake is still “in the early innings of capitalizing on AI demand” and the firm is poised to continue seeing “elevated opportunities within its data engine, which remains a central part of its growth strategy.” Like Palantir, I expect more deals and partnerships to act as rally fuel in the stock, as the firm looks to help firms look to get up to speed with their data before investing heavily in agentic AI. JPMorgan analyst Mark Murphy thinks that data management and compilation are a necessary first step before firms can make the most of the AI agent boom.
Though pricey-looking, I think Snowflake stock has more upside than the likes of Palantir, especially as enterprises get serious about harnessing the power of AI agents.
SerivceNow
ServiceNow (NYSE:NOW) is an AI beneficiary that could surprise a lot of investors this week as it reports earnings. Unlike Palantir, NOW shares are going into the next quarter in a tough spot. Shares are still down just shy of 20% from recent all-time highs, and while the valuation still bakes in a lot, I’d argue that ServiceNow might be able to serve up some upbeat AI commentary that helps shares make up for lost time.
As one of the rare AI laggards on the year, down over 10% year to date, NOW stock stands out as a relative value play, especially as we gain more clarity into the AI agent opportunity at hand. Given subscriber sales momentum and recent AI-driven advancements, I think the stage could be set for ServiceNow to report a decent number. Either way, NOW stock stands out as more of a longer-term way to play the rise of agentic AI as the firm looks to play the long game to transform customer workflows.
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