Debt ceiling vote in focus, AI stocks rose sharply

Spread the love

The stock market re-opened after a long weekend for Memorial Holiday in the US with renewed optimism over the debt ceiling discussion. However, major indices gain started to fade towards the end of the trading session as drama over the bill’s passing began.

The focus should rotate back to economic data.

With the debt ceiling deal in its final race, investors should be bracing for the Job’s Friday report. However, today we have the JOLTs, which will again shed light on the labour market momentum and if we can lower the inflation with a weaker labour market environment.

Consumer Confidence weakens but remains robust.

With inflation remaining elevated, it is no wonder that consumers are feeling less vibrant about the future of their spending ability. We see the Conference Board Consumer Confidence index softening to 102.8 for May from 103.7 in April.

AI euphoria carries other related counters to the moon

With the sharp rise of Nvidia, which is up around 180% for the year to hit a $1 trillion valuation mark, other AI counters are rising with the tide. In particular, we see C3.ai and Palantir joining the League of gainers.

C3.ai have risen sharply by about 233% for the year based on last Friday’s closing, and so did Palantir, which has rallied by about 128% for the same period. Tuesday saw them extending their lead against a profit-taking day.

Both stocks are now registering a rather lofty valuation. C3.ai is trading about 13x of its expected revenue, and Palantir is hovering around 12x of the same metric. If you compare that with Nvidia, it seems like a bargain because it trades around 18x of its future revenue.

We have accumulated more PLTR in this rise but are mindful not to chase further as we look towards a near-term peak unless a squeeze begin.

Do C3.ai and Palantir have real substance?

There are some fundamentals we can rely on. Let us look into C3.ai. They announced on Tuesday that its C3 Generative AI tool was first introduced in February and is now on the AWS marketplace (essentially an Amazon marketplace). The move is essential to speed up the procurement process and allow customers to tap into the combined prowess of Generative AI capability from C3 AI tools and the AWS program.

Next, Palantir also showed in April its product known as AIP, which is a short-form of Artificial Intelligence Platform. Sounds cool, right? We will see it frying the news further on its AI ambitions during an event called AIPCon. At the event, investors can learn more about the comments from its various clients and the new details on this AIP.

So, it’s a game-changer or tide-turner, perhaps.

What’s on the menu today?

8.50 pm : FOMC Bowman speaks
10 pm : JOLTs Job Openings (April)
12.30 am : FOMC Harker Speaks
1.30 am : Fed Governor Jefferson speaks

It is 31 May, Wednesday, 9 am in Singapore and 9 pm in New York. It is the final trading day of the month. We hope you have a prosperous month and look forward to sharing more market ideas and trends with you in the evening!