The rise of artificial intelligence (AI) has dramatically impacted Wall Street over the past three years, as leading companies like Palantir Technologies and Meta Platforms have demonstrated. Both companies have seen their stock prices soar, with Palantir’s shares increasing over 2,000% and Meta’s rising by 416%, showcasing the immense potential AI holds for enhancing business operations and growth.
Palantir has achieved success through its groundbreaking AI platforms, Gotham and Foundry. Gotham, primarily used by federal governments, allows for data collection and analysis and aids in military mission planning. Foundry, on the other hand, assists businesses in understanding and optimizing their data to improve efficiency. The irreplaceable nature of these platforms has contributed to Palantir’s stable operating cash flow, secured further by long-term contracts and high customer retention rates.
Meta Platforms, the parent company of Facebook, Instagram, WhatsApp, Threads, and Facebook Messenger, has leveraged AI to enhance its advertising power. By using AI to tailor advertising messages, Meta can potentially boost its ad growth and pricing power. Additionally, CEO Mark Zuckerberg is investing heavily in AI’s role in the development of the metaverse, a 3D virtual world that could represent the next frontier for digital interaction.
Despite these achievements, a significant concern emerges from insider trading activities. Both companies have witnessed massive net-selling by insiders, totaling more than $17.2 billion over recent years. While some selling can be attributed to executives needing to cover tax liabilities, the lack of insider buying is alarming. Neither company has seen significant insider purchases, suggesting that those who know these companies best are hesitant to invest further in their own stock.
The absence of insider buying raises questions about the future prospects of Palantir and Meta, especially in a market environment where investment opportunities appear limited. In light of this, the selling activities should serve as a crucial warning to investors. In such scenarios, it becomes imperative for potential stakeholders to exercise caution and conduct thorough due diligence before proceeding with any investment decisions.