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Palantir (PLTR) stock has gained more than 860% over the past two years driven by strong AI demand.
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Michael Burry bought significant put options against Palantir while CEO Alex Karp called the short bet crazy.
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Wedbush analyst Dan Ives believes Burry is dead wrong and sees more upside for Palantir despite elevated valuation.
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Shares of Palantir (NASDAQ:PLTR) have been scorching hot in recent years, and it’s continued to defy the laws of gravity. But after a spectacular quarterly earnings report, perhaps the laws of gravity are starting to come into effect. There wasn’t much in that last quarter to get too bearish about. AI demand is still red-hot, and the AI Platform (AIP) remains a compelling growth driver.
Still, it seems like the AI bubble talk is getting louder by the day, and, with that, we might have an environment where it takes more than a strong beat and raise; it might take a blowout quarter. Arguably, a blowout might no longer be able to do it when it comes to the hyper-growth plays that some investors may have acquired with less regard for valuation.
In any case, Palantir stock has more than tripled in the past year while gaining more than 860% in the past two years. Such a run has created profound wealth for the retail crowd, but the big question is what will happen once the AI trade runs out of steam. All the AI bubble chatter itself, I think, is not troubling enough to justify running to the hills.
However, with a legendary investor in Dr. Michael Burry (from The Big Short) recently buying up a significant amount of put options against shares of Palantir (and another AI darling in Nvidia (NASDAQ:NVDA), the generational hyper-growth stock has found itself in a tug-of-war between the bulls and the bears.
In prior pieces, I remarked on how difficult it was to time a bursting of any bubble.
And while Palantir shares may be overheated and overdue for a painful drawdown at some point, it’s unclear whether Dr. Burry will be proven right with his very risky bearish bets. Wedbush Securities’ Dan Ives still sees Palantir as having more room to run and thinks Dr. Burry is “dead wrong” to go short. I think it’s hard to go against Ives and Karp.
