Palantir Technologies (NASDAQ:PLTR) is one of the best performing stocks this year. The company’s strong results led to its share being listed on the stock exchange S&P500and now it has been moved to the Nasdaq exchange, where it could soon join the even more exclusive Nasdaq 100 index.
Could this become yet another catalyst that pushes these powerful artificial intelligence (AI) stocks even higher?
Do you miss the morning spoon? Wake up with Breakfast news in your inbox every market day. Register for free »
At first glance, Palantir’s move from the New York Stock Exchange to the Nasdaq may not seem like a big move, as many top growth stocks are listed on both exchanges.
But what has investors excited is its potential to be added to the Nasdaq 100 index, which includes the largest non-financial stocks on the exchange. And since many stocks on the Nasdaq 100 trade with market capitalizations of less than $100 billion, it should be a shot in the arm for Palantir, which is worth more than $145 billion, to get into the index.
That’s important because if it’s in the index, it means the stock is included in more exchange-traded funds and portfolios. All that buying could inevitably push the stock’s value even higher. The addition to the index will also be a good sign of the data analytics company’s massive success over the years, and the validation of its efforts and strong growth.
As a top tech and AI stock, Palantir could also become more popular with anyone who might not be as familiar with its business. It’s hard to imagine that many investors are unaware of one of the most popular ones growth shares present in the markets this year, but by being on a highly recognizable index, Palantir can attract even more attention.
While more investors may notice Palantir, many of them will also pay close attention to the stock’s extremely high valuation. With such a huge market capitalization, the stock trades at 58 times the revenue it generated in the last twelve months and over 320 times the profit it made. There isn’t a valuation multiple that stands out with Palantir that could help justify its current price tag.
Many investors seem willing to buy the stock solely on the expectation that it will move higher just because it is a popular AI stock. It is a speculative reason and perhaps one of the best examples of the Greater fool theory currently in force.
But attention can be both positive and negative. And as Palantir passes the radars of more and more investors and they notice its high valuation, their only move isn’t necessarily to buy the stock. They could also short it – and short interest in Palantir has been increasing lately.
