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CNBC TechCheck Evening Edition: August 13, 2025
CNBC's TechCheck brings you the latest in tech news from CNBC's 1 Market in the heart of San Francisco.
Yahoo
an hour ago
- Yahoo
This Might Be The Most Controversial Palantir Take Yet
Key Points Palantir's valuation multiples are at levels far beyond any of its peers in the software arena. At the same time, the company's revenue growth and profit margins exceed comparable businesses -- potentially suggesting the stock deserves to trade at a premium. While Palantir's growth is impressive, institutional investors may not rely as heavily on software industry metrics as much as Cramer implies. 10 stocks we like better than Palantir Technologies › Shares of data analytics powerhouse Palantir Technologies (NASDAQ: PLTR) soared by 141% this year. For two years running, Palantir is the top-performing stock in the S&P 500, and its momentum doesn't appear to be diminishing in the slightest. Following the company's blowout second quarter earnings report, CNBC investment personality Jim Cramer shared his thoughts on Palantir -- even going so far as to call the stock "ridiculously cheap". That's a bold statement, and one I'm not totally sold on myself. Let's explore some different valuation methodologies for Palantir and assess why Cramer still sees Palantir as a compelling buy. Is now a good time to buy Palantir stock? Read on to find out. Is Palantir stock overvalued? Many years ago, I worked as an investment banking analyst at SunTrust Robinson Humphrey -- which is now part of Truist Financial following its merger with BB&T Capital Markets. My focus was on mergers and acquisitions, and a key part of my role involved prepping comparable company valuation analyses. Broadly speaking, companies trade at a multiple of some profitability metric -- be it earnings, EBITDA, or free cash flow. Software-as-a-service (SaaS) businesses are a slight exception to these traditional valuation norms, however. While SaaS businesses often have healthy gross margins, they tend to reinvest excess profits to bolster sales, marketing, and product development efforts rather than capture near-term profitability. These dynamics make valuing Palantir a little tricky. For example, Palantir currently trades for a price-to-earnings (P/E) ratio of 621 and a forward P/E of 287 -- levels so stretched that they offer little insight as very few (if any) other SaaS businesses trade at comparable multiples. I've benchmarked Palantir against a sizable cohort of SaaS companies specializing in data analytics, cybersecurity, cloud infrastructure, customer relationship management, and enterprise productivity. Not only does Palantir boast a meaningfully higher price-to-sales (P/S) multiple than any of its peers, but the ratio is expanding. By this very nature, Palantir stock is becoming more expensive relative to other SaaS stocks -- suggesting the stock is well past the point of being considered overvalued. Given these dynamics, how can Cramer justify saying Palantir stock is cheap? Well, in order to understand his logic, investors are going to have to close the lid on traditional valuation protocols and look at some industry-specific metrics; in particular, the Rule of 40. Is Palantir's Rule of 40 score any good? The Rule of 40 is a SaaS metric that is calculated by taking a company's revenue growth and adding it to some sort of profit margin (i.e. free cash flow margin, operating income margin, or EBITDA margin). The chart above was included in Palantir's second quarter earnings report presentation. As investors can see, Palantir's Rule of 40 score of 94% is higher than any enterprise software company that generates at least $1 billion in revenue. Palantir's combination of accelerating revenue and improving profitability is unmatched in the software sector. When viewed through the lens of the Rule of 40, it's easy to see why some investors think the company's valuation is justified. My issue with the Rule of 40 Relying purely on the Rule of 40 to value Palantir is a controversial -- and potentially flawed -- approach. The metric can be misleading for many reasons: short-term revenue spikes can create the illusion of sustained high growth, while profitability can appear more durable than it really is if a company chooses to use adjusted non-GAAP figures that remove certain expenses. As seen in the footnote in the slide above, Palantir uses adjusted operating margin in its Rule of 40 score. This is calculated by adding back non-cash expenses such as stock-based compensation. Moreover, the Rule of 40 does not directly account for competitive dynamics in the broader market or the sustainability of growth -- meaning a high score does not necessarily imply that a stock is undervalued. While I applaud Palantir's growth throughout the AI revolution, I do think the stock is overbought and view Cramer's declaration that the stock is cheap as an outlier perspective. In practice, institutional investors at hedge funds and wealth management firms generally place greater weight on traditional valuation methodologies such as P/S, P/E, or cash flow yields over industry-specific metrics such as the Rule of 40. If these measures suggest that a stock is overvalued -- as they do with Palantir -- institutions will likely face pressure from their limited partners to trim exposure and lock in profits rather than add to their position at a premium valuation. Should you buy stock in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $653,427!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $1,119,863!* Now, it's worth noting Stock Advisor's total average return is 1,060% — a market-crushing outperformance compared to 182% for the S&P 500. Don't miss out on the latest top 10 list, available when you join Stock Advisor. See the 10 stocks » *Stock Advisor returns as of August 11, 2025 Annie Dean, a Vice President at Atlassian, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Atlassian, Cloudflare, CrowdStrike, Datadog, MongoDB, Palantir Technologies, ServiceNow, Snowflake, and Truist Financial. The Motley Fool recommends Confluent and Elastic. The Motley Fool has a disclosure policy. This Might Be The Most Controversial Palantir Take Yet was originally published by The Motley Fool
CNBC
an hour ago
- CNBC
U.S. companies rushed in imports at Port of Los Angeles to avoid tariff deadline, now pushed back
The July container volumes for the Port of Los Angeles tell the tale of the Trump tariff impacts. The frontloading of Chinese goods ahead of the tariff deadline pushed container volumes the Port of Los Angeles to levels it has never seen in its 117-year history. The port processed 1,019,837 twenty-foot equivalent units, or TEUs, in July. Imports came in at 543,728,000 TEUs, also a record. "Shippers have been frontloading their cargo for months to get ahead of tariffs and recent activity at America's top port really tells that story," said Port of Los Angeles Executive Director Gene Seroka. "Port terminals in July were jam-packed with ships loaded with cargo — processed without any delay, much to the credit of our dedicated longshore workers, terminal and rail operators, truckers and supply chain partners." But the level of tariff, at a minimum of 30%, didn't allow companies to import in full orders, according to Mike Short, president of global forwarding at C.H. Robinson. "This year's peak season started about two to three months earlier than normal," said Short. "We started to see it slow down a month or two before it would normally end, which just started." He added: "We have been in peak season for at least three to four months at this point. It's not as strong as we would normally see." The Trump administration announced its initial tariffs on April 2, but then extended deadlines to allow time for further negotiations, first to July 9 and then to Aug. 1. Another reprieve for high tariffs on Chinese goods was granted on Monday, and will expire in mid-November. According to Short, retail is the No. 1 area experiencing a pullback. Lower-cost items are another area, while the sectors that have continued to be healthier were the higher-value tech and health-care items, Short said. Trucking and rail companies make their money moving the containers. Less volume means less projected revenue. In an advisory note to clients, HLS Group wrote, the average spot freight rates from Shanghai to the U.S. have dropped almost 60% from the peak in early June. "However, the dramatic spot rate decline has slowed in August due to stronger capacity management by carriers, although it seems limited and not enough to stop the downward market. September might be the busiest time for the rest of the year, with increasing demand for the holiday season, which will push up spot rates," said the advisory. Alan Baer, CEO of OL USA, told CNBC the lack of any real peak season provides clear insight into the overall impact of tariffs. "Ocean spot rates follow volume, up or down, and volume follows consumer behavior coupled with risk-averse behavior by importers," said Baer. "Small- to medium-sized importers are being hurt as tariff levels remove some, if not all, of their gross margins." Using trade data from Panjiva, CNBC saw July exports included refrigerators from Samsung, housewares from Walmart, numerous containers filled with Christmas and Halloween items for Home Depot, backpacks from Capri's Michael Kors, and furniture from IKEA and Bob's Discount Furniture. The surge of containers has since dropped off, according to Marine Exchange, which monitors the incoming vessels into the ports of Los Angeles and Long Beach. Container ships on the way have started to dip, and the forecast anticipates the drop-off will continue over the next one to two weeks. "In the very short term, only 10 container ships are scheduled to arrive in LA or LB next 3 days, a big 7 fewer than the 'normal,'" wrote J. Kipling "Kip" Louttit, executive director of Marine Exchange of Southern California and Vessel Traffic Service. For the week ended Aug. 7, 37 container ships arrived, which is three fewer than the typical pace, according to Marine Exchange. The Port Optimizer for the Port of Los Angeles shows 16 scheduled vessels for the week of Aug. 24-30, a 16% decrease from the previous week.
