The Nasdaq Composite is one of the most widely followed stock indexes in the U.S. The tech-focused index tracks the performance of more than 3,000 stocks listed on its exchange. The Nasdaq-100 is a subset of the index, tracking the performance of approximately 100 of the largest non-financial companies on the Nasdaq stock exchange. To be included in the Nasdaq-100, a company must meet the following criteria:
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Be listed exclusively on the Nasdaq exchange.
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Be highly liquid.
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Been listed on an eligible exchange for at least three full calendar months.
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A minimum of 10% of its outstanding shares must be available for trading.
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Must not have filed for bankruptcy.
The index announced its annual rebalancing on Dec. 13 after the market close. Palantir Technologies (NASDAQ: PLTR) was selected to join the Nasdaq-100, “which will be effective prior to the market open on Monday, Dec. 23.” Since generative artificial intelligence (AI) went viral early last year, Palantir stock has surged 1,090%. Its decades of experience with AI made it the go-to for AI solutions, likely easing its admission to the index.
After its recent surge, some investors are reluctant to buy the stock, particularly given its frothy valuation. One Wall Street analyst believes that view is myopic. Let’s review the circumstances behind Palantir’s recent parabolic move higher and see whether there’s additional upside ahead.
Palantir was born from the rubble of 9/11, with the idea that the right AI algorithms could piece together seemingly unconnected bits of information that would uncover a terrorist plot before it could come to fruition. The company soon gained a following among the U.S. intelligence community and our allies, and military and law enforcement agencies quickly adopted its solutions.
Over time, the company expanded its offerings to bring its data mining, analytics, and AI know-how to enterprise customers, providing data-driven solutions. The advent of AI early last year brought customers in droves looking for solutions. Palantir swiftly developed a multipurpose tool to answer the call. The Artificial Intelligence Platform (AIP) was the fruit of its labor. By connecting AI to a company’s operational data, AIP can provide real-time, company-specific solutions to real-world problems.
To counter the knowledge gap existing at most companies, Palantir created boot camps where customers work one-on-one with Palantir engineers to develop these custom-made solutions. Evident in Palantir’s financial results, this removes the most common hurdle for businesses wanting to adopt AI.
