Palantir Is Becoming A Big Winner of Enterprise AI

Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zayd Admani and today is Tuesday, August 4th. In today's episode, I'll tell you why stocks are closing in at all-time highs. I'll also recap Palantir's blowout earnings and tell you why McDonald's turnaround plan is still a work in progress. Then stick around to the end of the show to find out how AI models from OpenAI and Anthropic We got a great show for you today, let's go. Stocks started the week with a monster rally on Monday. The S&P 500 jumped 1.5% and the Nasdaq surged 2.1%. And I have to give a shout out to the Dow. It added 1.3% and closed at record highs, but still don't care about the Dow. There seems to be two big catalysts right now carrying this rally. Oil and earnings. Let's talk about oil first. Investors are getting increasingly optimistic that the US and Iran will reach another agreement to reopen the Strait of Hormuz. In fact, Treasury Secretary Scott Besant went on CNBC this morning and said a deal could come as soon as today or tomorrow that would allow commercial ships to move freely through the Strait of Hormuz. Those comments sent oil prices tumbling. Brent crude dropped below $80 a barrel for the first time since July 10th. The other big driver of the rally seems to be the strong earnings season. We're about halfway through this earnings season and the numbers have blown expectations out of the water. Wall Street expected around 25% profit growth, but companies are delivering close to 35-40% profit growth. So investors are starting to be increasingly optimistic about the economy again. And there's also some spark back in the AI rally as well. A lot of the AI names were up big yesterday, especially the MAC7 stock. And you know, AI continues to be a big driver of economic growth. Oxford economists estimate that AI investments alone have generated nearly one quarter of recent U.S. economic growth. So the market is basically pricing in the best of both worlds right now that the AI boom keeps accelerating while the geopolitical threat starts fading away. The good vibes continue today. I'm recording this right after market open and I'm seeing a lot of green across the board. In fact, the S&P could close at record highs today if this rally doesn't fade. And we have a big day coming up because AMD and SpaceX are reporting earnings today after the bell. Those are going to be huge. We're going to break those down on tomorrow's show. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop. Let's run through some headlines, starting with Palantir. Palantir stock is ripping higher this morning after the company delivered what CEO Alex Karp called an otherworldly quarter. And he might not be exaggerating. Revenues nearly doubled from a year ago, jumping 93% to $1.94 billion and profits more than tripled to over a billion dollars as well. And the number that's getting everyone's attention is the U.S. commercial revenue. That business surged 149% to $764 million. Palantir is best known for selling data analyst software to the U.S. military and intelligence agencies all over the world. But their commercial business is now growing even faster as companies try to figure out how to actually deploy AI inside their operations. What Palantir software does is connects a company's scattered data and organizes it and lets companies build AI applications on top of that information to unlock insights. The pitch is that instead of employees just dumping sensitive corporate data directly inside ChatGPT or Cloud, Palantir gives businesses more control over where that data goes and which AI models they use. So corporate America is buying that pitch and that business segment is surging right now. And the government business is also doing great. U.S. government revenues jumped 90% to $809 million. The company is firing on all cylinders and looking ahead, they raised their four-year revenue forecast by roughly half a billion dollars. And that's why Palantir stock is up around 15% this morning at the time of this recording. Now remember, Palantir came into these earnings down 29% on the year because Wall Street was worried that OpenAI and Anthropic might end up eating their lunch. Both OpenAI and Anthropic are building out their enterprise business at a really fast pace. But I gotta say, CEO Alex Karp has done a great job making the case for Palantir being the layer that connects a company's proprietary data with the AI models so companies don't end up giving their data directly to OpenAI and Anthropic. Alex Karp is making the case that OpenAI and Anthropic will train their models based on a company's data and end up stealing that company's business. Obviously Karp is talking up his book, but I think it's an effective talking point. And he's not the only one making this case, Microsoft CEO Satya Nadella has been warning about the same thing. So it just shows you how worried the established tech companies are by the threat from OpenAI and Anthropic. It seems like the threat from OpenAI and Anthropic isn't slowing down Palantir at this point, so we'll see if this strong quarter will lead to a bounce back for the company in the second half of the year. Let's shift gears from AI and talk about a good old-fashioned business like McDonald's because they also reported earnings this morning and it was a mixed bag. Revenues for the quarter grew about 4% to $7.1 billion, which came in slightly below expectations, but adjusted earnings came in at $3.38 per share, slightly beating Wall Street estimates of $3.32 per share. When you dig a little deeper though, global same-store sales grew 1.3%, but US same-store sales rose just 0.8% and even that growth was driven by customer spending more per order, traffic to US restaurants actually declined in the quarter. McDonald's has been pushing these higher-margin beverage items like dirty sodas, which personally I'm not a fan of. I don't understand how anyone likes that kind of stuff, but those items have pushed up revenues per order. Now, in order to spark a turnaround, the company announced a leadership shake-up of the US business. They're bringing in Skye Anderson to run the division. He's been at the company for 26 years, so we'll see if Mr. Anderson can spark some growth here in the US. Here's a suggestion for Skye Anderson, maybe bring back the breakfast parfait, because personally that was my favorite item from back in the day. The market didn't hate these earnings. Shares of McDonald's are up around 2% this morning at the time of this recording, but if you zoom out though, the stock has declined 13% on the year. Let's talk about some stocks making moves today. Snap is moving higher this morning after delivering a surprisingly strong quarter and an upbeat sales forecast. Revenues for the company jumped 19% from a year ago to $1.6 billion, and daily active users were up 5% to 493 million, both those metrics beating estimates. It's kind of wild to think about that almost half a billion people use Snapchat every single day. But here's another sneaky stat. Snap's other revenues, which include Snapchat Plus subscriptions and paid storage, grew 85% to $316 million. Now, I'm not in the Snapchat demographic anymore, so I have no idea what's included as part of this Snapchat Plus subscription, but people are paying for it. Looking ahead, Snap expects third quarter revenues between $1.7 and $1.74 billion, which also came in above Wall Street forecasts. So it looks like Snap's core business is doing well. The big question though is what will happen with Snap's $2,200 AR glasses that frankly look hideous. CEO Evan Spiegel admitted on The Earnings Call that mass adoption of these glasses probably won't happen until the end of the decade. I think that's being too optimistic as well. But investors were more focused on the core business. Snap's stock is up around 7% this morning at the time of this recording, but if you zoom out, the stock has dropped 40% on the year, so they still have a lot of ground to make up. Now, on the flip side, Spotify is falling this morning despite reaching a major milestone. The company reported earnings this morning and they said they crossed 300 million paid subscribers for the first time ever. And overall, it was a solid quarter for Spotify. Total monthly active users grew 12% to 777 million and revenues jumped 14% to 4.74 billion euros. But the stock is moving lower this morning for a couple of reasons. For one, earnings for the quarter missed slightly, coming in at 2.61 euros a share versus the 2.76 expected. The reason for the mix was partly because of costs associated with marketing, cloud, and also AI. On top of that, the guidance also came in light. Spotify expects 788 million monthly active users for this current quarter, which is below the roughly 794 million that analysts were expecting. The company is also forecasting 670 million euros in operating income that also missed estimates. And that's why Spotify's stock is down around 4% this morning at the time of this recording. I gotta say, it's been a somewhat disappointing year for Spotify. Shares are down around 16% so far this year, and the company is also going through a CEO transition. So we'll see if the company can turn things around in the second half of the year. Let's wrap the show with a fun fact. Apparently, the latest AI models are now getting so good at cybersecurity that they're accidentally hacking companies. A couple weeks ago, OpenAI came out and said that their AI model broke out of a sandbox testing environment, got onto the open internet, and hacked HuggingFace, which is a major AI developer platform. Now, this model wasn't told to hack into HuggingFace. In fact, it wasn't even given internet access. The model was taking a cybersecurity test. It decided the best way to pass that test was to cheat, and the answers happened to live on HuggingFace's servers. Now, I'm not a technical expert here, but from my understanding, this model exploited some sort of vulnerability, got on the internet, and then hacked HuggingFace. That is both very impressive and very concerning. Well, then this week, Anthropic went back and reviewed over 141,000 of their own safety tests, and they found three cases where their model got on the internet and hacked into some company's systems. In Anthropic's case, the model thought they were participating in a simulated capture the flag hacking exercise, and they weren't even supposed to have access to the internet. But because of a misunderstanding between Anthropic and their testing partner, the models actually did have access to the internet, so they performed these hacks for real. So yeah, I think some of this stuff is pretty concerning, but it kind of makes me bullish on cybersecurity companies as well, because every company in the world is going to have to spend more money protecting themselves from AI-powered attacks. I also feel like OpenAI and Anthropic are using these incidents as a form of marketing, and I'm not the first one to say this is a very popular theory online, but you know, a story about your model breaking containment and hacking real companies sounds terrifying, but it also makes the model sound incredibly powerful. So I'm sure the executives over at OpenAI and Anthropic aren't exactly upset that these details are getting attention. Let me know in the comments on what you guys think. Is this something that we should be taking seriously, or are these hacking stories a bit overblown? Drop your thoughts on Spotify and YouTube. Well, alright guys, that's the rundown for today. Hope you guys enjoyed today's episode. Thank you guys so much for listening, watching, and commenting. Shout out to V and Kevin for all the work behind the scenes, and we'll see you guys back here tomorrow.