Investors remain optimistic

Palantir Technologies, Inc. has been delivering strong results as U.S. businesses increasingly adopt AI software to boost efficiency. However, despite the company’s impressive growth prospects, its high valuation may be challenging to justify, echoing the difficulties encountered by many internet stocks after the bubble burst in the early 2000s.

Palantir’s valuation has reached such elevated levels that the cost of its stock-based compensation (SBC) seems disproportionate to the company’s financial performance. Over the past year, the enterprise AI software provider has issued an additional 148 million shares, bringing the total number of diluted shares to 2.56 billion.

Despite being projected to generate only $4.15 billion in revenue, this dilution has effectively added close to $28 billion in market value. In other words, the value created through stock-based compensation is about seven times higher than the company’s expected sales, which is higher than the price-to-sales multiple of major software firms like Salesforce (customer relationship management). Moreover, this figure only reflects the impact of stock options and restricted stock units awarded to executives and key employees.

Although share dilution increased by around 6% year-on-year — from 2.41 billion shares in the second quarter of last year — the impact is significant given the company’s valuation. With a fully diluted market capitalisation of around $474 billion, Palantir is trading at over 100 times sales, while Wall Street estimates revenues will reach just over $40 billion by 2033. Therefore, Palantir’s valuation appears overvalued, with shares trading at almost 9x the projected revenue for 2034. For context, Salesforce (customer relationship management) is expected to generate around $41 billion in sales this year and is valued at less than six times that figure. At current levels, investors are essentially paying upfront for more than a decade of growth.

The fact that Palantir’s stock price has continued to rise does not necessarily prove that the current valuation is sustainable, nor does it dismiss concerns about it. Market history shows that, eventually, fundamentals tend to reassert themselves. In many ways, market manias mirror fashion trends: they come and go, no matter how popular they seem at the time.

In conclusion, Palantir appears expensive when assessed using traditional valuation methods, even under the most optimistic growth assumptions. While this does not necessarily imply an immediate collapse in the share price, the stock is currently trading at bubble-like levels, leaving little to no margin of safety for investors. Earlier this year, Palantir underperformed the broader market when macro conditions weakened in February and March. It only recovered in April, which coincided with the Trump administration’s decision to pause reciprocal tariffs.

This highlights the risks ahead: if economic conditions worsen again, Palantir's high valuation may be difficult to maintain, leaving the stock vulnerable to another sharp decline.

The most important event on this week's macroeconomic agenda is the release of the purchasing managers' indices from the U.S., major European countries, India and Japan on Thursday, 21 August. Based on expectations for the U.S. purchasing managers’ index in August 2025, the U.S. economy looks set to weaken (see graph below).

On Wednesday, 20 August, the Danish company Lundbeck is scheduled to publish an interim report. In the U.S., Lowe’s Companies, the TJX Companies and Analog Devices are due to report their quarterly results. The macroeconomic events begin with the release of Japan's trade balance and machinery orders figures for July and June, respectively. The UK's consumer price index and producer price index for July and Germany's producer price index for July are due a few hours later. This will be followed by the Eurozone's consumer price index in July and labour costs in Q2. The Swedish Riksbank will announce its interest rate decision. From the U.S., the Federal Reserve's policy meeting minutes from 29–30 July, and the Department of Energy's weekly oil inventory statistics are expected.

On Thursday 21 August, Hufvudstaden, GN Store Nord and Kojamo will report their interim results, as will Walmart and Intuit in the US later in the day. The macro agenda is dominated by the August purchasing managers' index from Japan, India, France, Germany, the eurozone, the UK and the U.S. In Europe, data on Swedish industry capacity utilisation in Q2, as well as the household confidence indicator for the Eurozone in August are also expected. From the U.S., the Philadelphia Fed Index for August, weekly jobless claims and existing home sales in July are also on the agenda.

On Friday 22 August, Nibe, which is listed on the Stockholm Stock Exchange, will release its Q2 2025 report. Friday's macroeconomic agenda is short and begins with Japan's consumer price index for July. This will be followed by UK retail sales in July and Germany's gross domestic product for Q2. France will release an indicator of its business climate in August. Federal Reserve chairman Jerome Powell will also deliver a speech at the Jackson Hole Symposium.

The S&P 500 remains in a strong uptrend, supported by higher lows and all major moving averages. However, momentum indicators are showing early signs of fatigue. A decisive move above 6,475 would confirm continuation of the bullish trend, while a failure to maintain the rising trend line could prompt investors to take profits and lead to a deeper retracement towards 6,100. While the broader trend remains intact, waning MACD and a flattening RSI highlight the risk of a short-term pullback. This makes resistance and support levels key areas to monitor for a potential reversal or stabilisation.

The NASDAQ-100 is still in an overall uptrend, which is supported by moving averages. However, momentum is fading, as indicated by the MACD signal, which shows potential weakness. Sustained movement above 23,945 would confirm renewed bullish momentum, whereas a drop below 23,400 could trigger a deeper pullback towards 22,645.

In Europe, the DAX is showing bullish momentum, which is being supported by the trend. MACD appears to have also broken the falling trend, while the RSI is not yet signalling overbought conditions. This leaves room for further gains if buying continues. Sustained movement above the 24,450-resistance level would confirm real strength. Until then, there is a risk of a pullback, with potential downside towards key moving averages.

The OMXS30 is in a confirmed bullish trend, trading within an ascending channel, and all major moving averages and the MACD are supporting continued momentum. A sustained break above 2,650 would indicate potential for further gains, although the index is approaching resistance. While there is still potential for growth, investors should also be aware of the risk of profit-taking. Key support levels could stabilise the market in the event of a pullback.

EMA 9: 9-day exponential moving average

Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence in which each successive number is the sum of the two previous numbers.

MA20: 20-day moving average

MA50: 50-day moving average

MA100: 100-day moving average

MA200: 200-day moving average

MACD: Moving average convergence divergence

RSI: Relative strength index