Stock markets ended last week with significant gains, with major indices recording their second consecutive week of growth thanks to strong employment reports and potential easing of trade tensions between the US and China. The Dow Jones Industrial Average strengthened by 3%, the S&P 500 rose by 2.9%, while the technology-heavy Nasdaq Composite added 3.4%. Friday’s rally helped the S&P 500 erase losses from April 2, when President Donald Trump announced his “liberation” tariffs.
Key Events This Week
- The Federal Open Market Committee (FOMC) meeting is scheduled for Tuesday and Wednesday, with the Fed expected to keep interest rates unchanged.
- Fed Chairman Jerome Powell’s press conference could provide hints about the timing of future rate cuts.
- The intensive earnings season continues with expected reports from companies including AMD, Super Micro Computer, ARM Holdings, Palantir, Coinbase, Shopify, Walt Disney, Novo Nordisk, Uber, Ford Motor, DoorDash, AppLovin, and DraftKings.
Stock to Buy: Palantir (PLTR)
Palantir will release its Q1 2025 results on Monday after markets close, with expectations pointing toward potentially strong results and an optimistic outlook. A call with CEO Alex Karp is scheduled for 5:00 PM ET.
The data analytics and AI software company is benefiting from a favorable shift in US government and military spending, which prioritizes software and AI solutions over traditional hardware and equipment. Additionally, Palantir is well-positioned to secure lucrative contracts from European defense agencies that are increasing their budgets.
- Wall Street expects earnings of $0.13 per share, representing a 62% year-over-year increase.
- Revenue is projected to rise by 36% to $862.2 million due to growing demand for AI software solutions, particularly in US government agencies and the defense sector.
- This would mark the seventh consecutive quarter of accelerating revenue growth, building on momentum that caused a 24% jump in the stock after February’s earnings report.
From a long-term perspective, Palantir appears strategically positioned at the intersection of two powerful trends: increased government technology spending and the AI revolution. With rapidly growing federal expenditures on artificial intelligence in North America and Europe, the company remains advantageously positioned.
According to the options market, a movement of up to 16% in either direction is expected for the stock. Shares – which have staged an astonishing rally since April 7, when they were at $66.12 – closed Friday at $124.28 (just below the mid-February all-time high of $125.41).
Despite concerns about valuation, Palantir’s technical picture is exceptionally strong, with “strong buy” indicators across all time frames. With an RSI of 72.38, the stock is in overbought territory – typically a warning signal, but in the context of pre-earnings momentum and strong fundamentals, this suggests powerful buying pressure.
Stock to Sell: Ford (F)
In contrast, Ford faces a turbulent period as it prepares to release its Q1 results on Monday evening. Analysts expect lackluster results, but the broader outlook raises greater concerns.
As could be expected, a survey of analyst outlook revisions from InvestingPro points to growing pessimism ahead of the earnings announcement – all five analysts covering Ford have revised their EPS estimates downward in the past 90 days.
- With President Donald Trump’s proposed tariffs on automobile and auto parts imports, Ford will likely reduce its full-year profit and revenue outlook.
- The company’s generous dividend, currently yielding around 7.3%, may also be at risk if financial pressures persist.
- Wall Street projects earnings per share of $0.02, a significant decline from a profit of $0.49 per share in the same quarter last year.
- Revenue is forecast to fall by 16.3% year-over-year to $35.79 billion.
The primary concern for Ford is the potential impact of impending tariffs on car and auto parts imports. These tariffs could increase manufacturing costs and vehicle prices, potentially eroding Ford’s profit margins and affecting demand.
Ford’s challenges extend beyond policy uncertainties. The company continues to navigate the complex transition toward electric vehicles while managing legacy product lines and dealing with intense competition from both traditional rivals and new market entrants. Recent quality issues and recalls have further complicated the company’s path forward.
According to the options market, traders expect a movement of approximately 7% in either direction for the stock after the earnings announcement. Shares – which fell below $8.50 last month for the first time since January 2021 – closed Friday’s session at $10.28.
According to InvestingPro, Ford has an overall financial health score of 2.58, which corresponds to a “GOOD” rating on their scale. However, the automaker’s dependence on import-oriented supply chains makes it particularly vulnerable and could significantly weigh on its stock.
