We recently compiled a list of the ARK Invest Stock Portfolio: Top 10 Stock Picks for 2024. In this article, we are going to take a look at where Palantir Technologies Inc. (NYSE:PLTR) stands against ARK Invest’s top stock picks for 2024.
ARK Investment Management LLC, more commonly known as ARK Invest, is an American investment management firm headquartered in St. Petersburg, Florida, that oversees several actively managed ETFs. It was registered in 2014 by Catherine Wood, who is known for making big bets on disruptive technology like self-driving carse and genomics. The investment fund has around $6.7 billion in assets under management.
READ ALSO: Cathie Wood’s 11 Favorite AI Stocks and Jim Cramer November Portfolio: Top 10 Stocks.
Wood’s flagship fund has faced pressures for the third straight year, with outflows at nearly $1.8 billion during the first six months of 2024, which was close to triple the outflows seen in 2023. Its closing price of $57.85 on November 11 was down 60% from the highs of early 2021. In a letter posted to investors in July, she acknowledged that the fund’s performance was challenged by certain stock picks and the overall macroeconomic environment, but added that ‘our conviction in and commitment to investing in disruptive innovation have not wavered’.
The ARK Invest CEO argued that the fund’s holdings were set to benefit once the Fed rate cuts begin and that she anticipates another period of strong returns, reminiscent of the gains witnessed during the initial days of the pandemic. In August this year, in the hope of buying the dip, Wood piled into several tech stocks whose shares had tumbled in the months prior. Since the announcement of interest rate cuts in September, ARK’s flagship ETF has grown 25%, with a major upward spike in the week running up to and following the presidential elections, which Donald Trump won on November 5.
In a post-election message released to investors, Wood likened the country’s current economic situation to the Reagan era in the early 1980s, when the interest rate and tax cuts resulted in robust economic growth, eventually helping the United States grow out of deficit and into a surplus in the Clinton era.
Cathie Wood predicts a bright future and has stated that Trump’s policies will ‘turbocharge’ the American economy more powerfully than the Reagan Revolution did. She expects the newly elected president to slash regulations and cut tax rates, as he did during his first term.
Trump during his election campaign vowed to reduce the corporate tax rate to 15%, after having already cut the rate from 35% to 21% in his presidency between 2017 and 2021. Having said that, Wood believes that businesses will put investments on hold until the promised cuts are delivered, which means the positive anticipated impact on the economy will be delayed.
Methodology
We scanned the ARK Investment Management portfolio, as of September 30, 2024, and picked the top 10 stocks according to their stake value. The figures were sourced from the Insider Monkey Database.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A software engineer manipulating a vast network of code on virtual monitors.
Palantir Technologies Inc. (NYSE:PLTR)
Stake Value as of Q3 2024: $409,861,198
Palantir Technologies Inc. (NYSE:PLTR) is a technology company headquartered in Denver, Colorado, that specializes in software platforms for data analytics. These platforms are used by government agencies, financial institutions, and several large corporations. It is one of the top picks from the ARK Invest stock portfolio, with the asset management firm having a stake of over $409 million in the company.
The stock has gained 41% since the announcement of financial results for the third quarter of 2024 on November 4. Revenue for the quarter was posted at $726 million, up 30% year-over-year and 7% compared to Q2 2024, driven by a surge in demand for artificial intelligence, with customer count growing 39% from last year.
In a letter to shareholders on the same day, CEO Alex Karp pointed out the speed of adoption of its platforms and AI capabilities by institutions in the U.S. being a major driver behind Palantir Technologies Inc. (NYSE:PLTR)’s growth. U.S. revenue grew 44% from last year to a total of $499 million for the quarter, of which 64% came from the U.S. government customer base, with the remaining being commercial revenue. U.S. government revenue grew 30% year-over-year during Q3.
Palantir Technologies Inc. (NYSE:PLTR) closed 104 deals in the quarter, contributing over $1 million toward revenues. Adjusted EPS was logged at 10 cents, beating expectations of 9 cents. EPS for the quarter was 43% higher year-over-year. Palantir also ended with strong liquidity, as cash, cash equivalents, and other short-term securities valued at $4.6 billion.
Looking ahead, the company expected total revenue between $2.805 and $2.809 billion for the full year, of 2024, and forecasts income from operations to be in the range of $1.054 and $1.058 billion. Palantir Technologies Inc. (NYSE:PLTR) has also raised its free cash flow guidance for 2024 to over $1 billion. In September, S&P Global announced the inclusion of the company in the S&P 500 stock index, which has further bolstered the company’s encouraging outlook.
Overall PLTR ranks 7th among the ARK Invest’s top Stock Picks for 2024. While we acknowledge the potential of PLTR as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.