Palantir
Palantir (PLTR) shares are charging back towards their 52-week highs on the heels of another impressive earnings report.
The AI/defense-driven stock reported earnings that were right on the mark, with analyst expectations on better-than-expected revenue. Year-over-year, Palantir’s earnings growth weighed-in at 20.8%, the first time that growth of more than 20% has been achieved since November of 2022.
Palantir’s management issued forward guidance that is lighter than Wall Street’s expectations, causing the stock to drop more than 10% in after-hours trading.
The stock’s price increased 8% in regular trading on Monday as investors and traders were front-running hopes of an improved outlook from the company after February’s strong guidance. The stock also broke below a key technical trendline on Monday as it crossed above its 50-day moving average at $23.41.
Short-term support for traders of the stock lies at $22.50, a price that saw a consolidation in price over the last week. That’s also where the stock’s 20-day moving average sits, a trendline that I refer to as the “Trader’s Trendline” for its short-term influence over stock prices.
Shares turn into an attractive long-term buy if they dip to $20.
SoundHound
SoundHound (SOUN) stock shot higher today, as shares increased more than 15%. Like Palantir, Disney (DIS), and Arm Holdings (ARM), the move is driven by traders buying the stock ahead of its earnings report. That report is dropping on the market after the close on Wednesday.
This stock has been one of the AI darlings over the last year as it surged on to the scene after Nvidia (NVDA) took note of the company with an investment in their stock.
Over the last year, SoundHound shares have rallied more than 145%, but that includes a drop of 50% from its March highs to its current price. The volatile nature of the last three months’ trading shows the pure speculation behind the stock’s moves.
In late February, the company announced earnings that missed expectations by $0.01 along with a revenue miss. That earnings miss was driven by an 80% growth in revenue compared to last year, which is why we’re seeing so much speculation ahead of Wednesday’s report.
Today’s move puts the stock within striking distance if crossing above its 50-day moving average just days after crossing above its faster moving 20-day moving average. The 50-day moving average remains in a bullish trend, despite the stock’s decline Since March.
That technical combination puts SoundHound shares in a position to rally back to $10 in short order on any positive earnings results on Wednesday. On the other side of the trade, a report like February’s would target a price of $30 or lower.
Simply put, an upside of nearly 100% weighed against a 45% downside still favors bullish traders, which is why there is so much interest in the stock today.
Microchip Technology
Microchip Technology (MCHP) appears to be pulling a page from Apple (AAPL)’s playbook.
Shares of MCHP are trading 3% lower after the close, after the company disappointed on their earnings report.
For the quarter, they reported in-line results on revenue that was slightly lower than what investors were looking for. The dark side of these numbers is the year-over-year comparison that shows the company’s revenue is 80% lower than last year.
Making matters worse, the company issued downside guidance for its next quarter as management is forecasting revenue that is almost 10% less than Factset and other analysts are expecting.
In a move that Apple pulled last week, Microchip’s management announced an increase to their dividend by 18% from a year ago. The move makes the stock more attractive from a “returning cash to investors” perspective, but remember that this is a growth stock now a dividend yielder. For the record, that dividend represents a yield of less than 2%.
MCHP stock has been locked in a wide trading range since December of 2023. That range is bound by $92.50 on the top and $82.50 on the bottom. Today’s earnings news will thwart the stock’s recent attempt to break out of the top of its range as momentum for an additional move higher is absent.
About the Author
Chris Johnson (“CJ”), a seasoned equity and options analyst with nearly 30 years of experience, is celebrated for his quantitative expertise in quantifying investors’ sentiment to navigate Wall Street with a deeply rooted technical and contrarian trading style.