In the first season of Friday Night Lights, the Dillon Panthers lose the first game after their star quarterback is injured. The team falls apart, and despite a valiant effort from their backup, they come up short. In the locker room afterward, Coach Taylor delivers a sharp rebuke to the team: “Not good enough. Not nearly good enough.” The problem wasn’t talent—it was effort. They didn’t give it their best.
Recently, Palantir Technologies found itself in the opposite position. The AI powered data analytics company delivered what its CEO called “the best results any software company has ever delivered.” Revenue exceeded expectations, and the company raised guidance for the rest of the year. In other words, they gave it their best—and yet, Wall Street said it wasn't good enough--the stock dropped 8%.
Is Palantir overvalued? Probably, but that's not the point. It may go on to be even more overvalued, making investors plenty of money along the way. The point is that we're in a weird place--economically and in the markets--and you can feel it on days like last Tuesday when Palantir reported earnings. It and other AI-related stocks are priced for perfection, so any result that's merely "great" instead of "spectacular" brings an outsized reaction.
AI has created a new dynamic, and it may take a few years before we figure out who the ultimate winners and losers will be. In the meantime, the stock market is at all-time highs, GDP is steadily growing, and unemployment is historically low. Yet job growth is slowing, inflation is still stubbornly high, the government is in its longest shutdown ever, and tariff uncertainty continues to weigh on both businesses and consumers.
That is a lot of conflicting information--and it leaves many investors without a clear sense of direction. But long-term investors who already have a plan don't need direction from the markets. They have a diversified portfolio built for a range of outcomes and the patience to stick with it through uncertain times.
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Josh Norris is an Investment Advisory Representative of LeFleur Financial. Josh can be reached at josh@lefleurfinancial.com.
Josh Norris, CPA, CFP, CFA is the managing member of LeFleur Financial, a wealth management and tax advisory firm.