Daily Stock Pick: May 16th, 2023

Here’s the reality – you’re going to be hearing a LOT about AI in the next few years, and for good reason. Generative AI has been a substantial leap forward, and it’s not just mega businesses that are jumping into the race – countries are as well.

The largest AI arms race is between the US and China. And while this arms race has been going on for years already, it has recently intensified thanks to escalating geopolitical tensions coupled with ChatGPT exposing just how transformational this technology is.

As Bloomberg notes: 

“US Central Command is using AI to quickly detect targets in the congested spaces of the Persian Gulf. Ukraine has employed AI-enabled technology to predict and prepare for Russian airstrikes. China is reportedly harnessing AI for everything from shipbuilding design to electronic warfare.”

Is this arms race ultimately good for humanity? That’s hard to say. But what is easy to say is this – it’s unavoidable. So as an intelligent investor, you might as well profit from it and better secure your own financial fortress.

This brings us back to today’s stock pick. It’s a company with strong ties to the defense industry that just launched a groundbreaking AI platform – a major catalyst. On top of that, it has finally flipped into profitability, with its latest earnings reports surpassing analyst expectations.

Palantir Technologies Inc. (PLTR)

Founded by controversial billionaire and PayPal co-founder Peter Thiel, Palantir is a big data analytics firm that initially used its capabilities to exclusively help the US government in things ranging from counter-terrorism to fraud detection to predictive policing. However it has since diversified to serve state and local governments as well as private companies – although the federal government remains a major client.

Like many tech companies, Palantir was unprofitable for many years – relying on cheap venture capital funding to stay afloat. But that has changed. It reported its first profitable quarter for 4Q2022 – a feat it repeated in 1Q2023. And the company notes it expects to be profitable through the end of 2023.

Shares in Palantir surged considerably after the earnings announcement a couple weeks ago – leading some to question where the stock was still a good buy post-surge.

We believe there are several reasons for investors to still consider its stock. One, Palantir has just launched its new AI platform – which allows commercial and government sectors to use large language models based on their own private data sets. Palantir’s CEO is reporting that they are seeing “unprecedented demand” from potential customers.

In short, with both AI and geopolitics serving as powerful tailwinds – plus a company that has just turned the profitability corner – this could be just the beginning for Palantir’s run.

To your wealth,
Felix @ Ace of Investing