The AI Investing Pulse

November 7th, 2024

Two AI Stocks on the Rise: Palantir & Astera Labs Capture Investor Interest with Record Gains

Palantir (PLTR) has certainly been in the spotlight recently, hitting record highs after its latest earnings report showed solid revenue growth and expanding AI capabilities.

Even Morgan Stanley’s Keith Weiss, previously one of the more sceptical voices, upgraded his stance from “underweight” to “equal weight,” recognising Palantir’s strengthening financials and its growing role in the generative AI space. This shift reflects a broader institutional interest as Palantir continues to make waves in AI-powered analytics.

The Motley Fool notes that Wall Street remains largely cautious about the company’s valuation. Despite recent gains and a strong position in AI-driven analytics, many analysts are hesitant, citing Palantir’s high valuation relative to its growth prospects.

Moreover, The Street reports that Palantir’s strong earnings have caught the attention of seasoned traders, who are taking bullish positions and riding the post-earnings momentum. Similarly, Schaeffer’s Research highlighted a rise in options activity, indicating a renewed appetite among investors.

Palantir’s valuation is still quite high relative to its growth rate. Still, with solid fundamentals and an increase in institutional interest, Palantir appears to be gaining strong momentum.

Astera Labs Inc. (ALAB) has also made headlines, particularly after a stellar third-quarter earnings report. The company posted a 47% sales boost from the previous quarter and an impressive 206% year-over-year increase, signalling a serious growth trajectory, as reported by Investor’s Business Daily. Unsurprisingly, this performance sent the stock up by over 30% post-earnings.

Craig-Hallum recently raised its price target for Astera Labs from $75.00 to $105.00, reaffirming a “Buy” rating. This upgrade reflects optimism around Astera’s continued expansion, especially as the company diversifies its customer base and enhances its product offerings with AI-driven solutions. The Scorpio product line, in particular, is expected to contribute significantly to revenue by 2025, addressing investor concerns about diversification and sustained growth.

Astera Labs' robust financial performance, coupled with its focus on AI infrastructure, positions it as a strong player in high-speed connectivity solutions for AI data centres. However, with a valuation exceeding 40 times sales, some analysts suggest a measured approach, advising investors to weigh its premium price against growth prospects.

In summary, both Palantir and Astera Labs have delivered strong earnings and growth momentum this week, catching the eyes of investors and analysts alike. Palantir’s expanding influence in AI-powered analytics and its steady government contracts affirm its position as a key player in data-driven solutions, though some caution remains around its high valuation. Astera Labs’ emphasis on high-speed connectivity for AI data centres, along with impressive quarterly gains, underscores its role in the AI infrastructure space, where demand for powerful, efficient hardware is set to grow.

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