While Palantir (PLTR) is not a direct parallel, it is an AI focused company that trades at a rich valuation.
These types of valuations are at risk as we grapple with the notion of potentially even higher rates from the Federal Reserve.
After gapping higher above $21, PLTR has failed to see any follow through on the initial momentum.
Moreover, momentum has now turned negative and its testing the $21 level as support, alongside a series of lower lows and lower highs.
Since PLTR barely turns a profit, using EV to sales is a better valuation metric, which trades at over 21x.
Persons:
PLTR
Organizations:
Federal Reserve, EV