Notable earnings came from Palantir (PLTR), which took some air out of the short seller’s narrative that AI is going to replace all software stocks. For a while, that worry hurt Microsoft (MSFT). But between Microsoft‘s recent beat from monetizing OpenAI and Palantir’s phenomenal beat following two perfect quarters, the shorts are being overrun.
My stock grading system rates Palantir (PLTR) as a C. Remember, the total grade consists of a quantitative score and a fundamental score, with quantitative counting for 70%. Palantir’s volatility over the past six months has undermined its stellar fundamental score. Remember, the quantitative score is changing every day.
For more information about my stock grading system, click here.
Normally, I do not like August, since it is a seasonally weak month, but this year, I expect it to be a major rebound month.
The exhaustion of mean-reversion algorithms (i.e., stocks returning to their historical norms and patterns), the capitulation and implosion of the Situational Awareness hedge fund, and unscrupulous short sellers spreading false narratives around Chinese AI models such as DeepSeek gearing up to defeat American AI models (ChatGPT, Claude, and Grok), have left the stock market grossly oversold and poised for a significant rebound.
For the third quarter, the Atlanta Fed GDPNow tool is now estimating 6.2% annual GDP growth, which is above the 5% annual pace that I predicted back in December on Fox Business. Before investors get too excited, though, please be aware that the Atlanta Fed often starts strong and then revises its earnings estimates lower as the quarter progresses.
Technology imports from Asia are expected to remain high due to the AI boom that is underway.
Related: Louis Navellier sends strong message on Nvidia’s circular deals
Just to demonstrate how strong demand is, Apple (AAPL) had to warn that the shortages of CPUs and high memory prices are expected to curtail its production of iPads, Mac computers, and iPhones.
So, believe it or not, technology profits for semiconductor and memory companies are still accelerating!
My stock grading system rates Apple (AAPL) as a B.
For more information about my grading system, click here.
Bond vigilantes versus reckless governments
Investors looking for something to worry about may want to follow the bond vigilantes, who have been focused on the reckless fiscal policies of Japan, Britain and France.
The bond vigilantes have focused on Japan’s budget woes, substantially weakening the Japanese yen. However, Treasury Secretary Scott Bessent recently intervened to help shore up Japan’s currency.
Meanwhile, JPMorgan Chase CEO Jamie Dimon recently warned on a podcast that a bond market reckoning is coming. Dimon is concerned about long-term Treasury bond yields as cumulative U.S. debt approaches $40 trillion.
At the moment, however, Treasury auctions and bid-to-cover ratios remain normal under Treasury Secretary Scott Bessent. The velocity of money, which measures how quickly money changes hands, is also accelerating and contributing to healthy bidding at Treasury auctions.
Nonetheless, the bond vigilantes, who are big institutional investors, have pushed long-term Treasury bond yields higher, so that has upset some fixed-income and dividend investors. The moderating crude oil prices should help squelch recent inflation fears and lower interest rates.
Related: Palantir CEO escalates Microsoft’s AI warning