My New Price Target for Palantir, Amazon Job Cuts, Robots Take Over
Let's check the chart and my new target for Palantir, why Amazon is reportedly cutting 30,000 jobs, and why the robots are taking our jobs.
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The news made headlines. The stock traded higher, as it had for days prior. Reuters reported on Monday that Amazon (AMZN) will be cutting 30,000 corporate jobs, which would account for almost 10% of its "professional" workforce. These cuts, which according to the sources referred to in the story, will start as soon as today and will be its largest job reduction made since 27,000 people were let go in late 2022.
Amazon, at present, has a global workforce of roughly 1.55 million employees, of which 350,000 or so are considered "corporate" employees. Areas of the company expected to be hit would be Human Resources, Devices & Services, Operations, Technology and "People experience." While the news is a jolt, it's not really a surprise.
A report in the New York Times had inferred that Amazon's robotics team was working toward potentially automating as much as 75% of the company's operations jobs and could remove more than 160,000 U.S.-based positions that would have otherwise been needed by 2027. That same report sees Amazon increasing robotic automation to the point that the company can replace as many as 600,000 jobs that would have otherwise been human hires by 2033.
This pleasant news comes on top of CEO Andy Jassy's warnings back in June that automation and the dawn of artificial intelligence would evolve the company's labor needs, impacting its white-collar labor force. Jassy has, in the past, called upon his employees to adapt to these changing realities.
Domo Arigato Mr. Roboto?
The job cuts that begin later today are supposedly just to offset over-hiring by Amazon during the pandemic era, but the handwriting is on the wall. Adapt or be left behind. There will be no long careers at one or two companies going forward. Those were the days of our fathers. Heck, there may not even be occupations that last an entire career.
We have already seen so much technological progress just since my career began, which is now a long while ago. I am already one of the last human traders. That progress is only going to accelerate from here. What took many years in the past will now take months or at least fewer years. Not to scare any of you, but my slightly younger friends tell me what their sons and daughters are studying in college and I often cringe. I have to bite my tongue, because I know they have already spent a fortune.
Sometimes, I know that their children, with some fancy degree in hand that will look awfully nice on the wall, are going to end up wiping tables and mopping floors. Going forward, my instincts tell me that not just will skilled labor outperform white collar work, but doing something entrepreneurial will be preferential to all other options. Working for oneself will never permit younger workers to become dependent upon the system or any system for household supporting compensation. Working for themselves will permit younger workers to spot trends more quickly and adapt more efficiently as will be required to stay competitive.
Why is Amazon getting aggressive now? Have you seen the charts of Meta Platforms (META) , Alphabet (GOOGL) or Microsoft (MSFT) ? Those stocks have all significantly outperformed Amazon over the past year and change even if they have behaved sluggishly themselves at times. All are heavily invested in the development of machine learning and artificial intelligence.
Do you know what the difference is? Amazon, due to the nature of its best-known business, has, by far, the largest human footprint. I have already told you that Amazon employs roughly 1.55 million humans. Microsoft operates with a payroll of approximately 228,000, and Alphabet gets by with a little more than 187,000 workers. Meta Platforms? Maybe 76,000 folks work for Mark Zuckerberg. That really tells you all that you need to know. Walmart (WMT) employs about 2.1 million people. If the advent of robotics cuts overhead and increases margin substantially at Amazon, what do you think Walmart is going to do? Target (TGT) ? Costco (COST) ? Others?
Semiconductor-Palooza!
On Monday, Qualcomm (QCOM) announced its entry into the artificial intelligence accelerator market to compete with the likes of Nvidia (NVDA) and Advanced Micro Devices (AMD) . Nvidia has dominated this market and AMD until now, has been Nvidia's most serious competitor. Qualcomm's AI200 will be released in 2026. Then, the AI250 will hit the market in 2027. These chips will be used in racks like those designed at Nvidia and AMD. Qualcomm insinuated that another chip will be on the way in 2028 as well, so apparently, the firm is entering this market to stay.
What did Qualcomm's stock do on Monday? It soared, gaining 11.1%. Does that mean that both Nvidia and AMD sold off? Not a chance. Bloomberg news reported that Nvidia and Deutsche Telekom (DTEGY) were about to announce plans for a new $1.2 billion data center in Germany to be built for SAP SE (SAP) . Nvidia's stock was up 2.8% on Monday.
Elsewhere, Reuters reported that AMD and the U.S. Department of Energy were getting together in a $1 billion partnership to build two supercomputers for the government agency. The first supercomputer will be built with AMD's MI355X accelerators, the second with AMD's M143) series of chips. Oracle (ORCL) and HP Enterprise (HPE) are involved in the project as well. AMD shares gained 2.7% on Monday.
In fact, the Philadelphia Semiconductor Index gained 2.7% for the day itself as did the Dow Jones U.S. Semiconductor Index. It's almost as if algorithms were in charge. Marvel technology (MRVL) , another company trying to compete in the AI accelerator space, was up 5.4% with no headlines. Broadcom (AVGO) ? Also planning to compete. Also, no headlines. Up 2.2%
Marketplace
It was a nice Monday on Wall Street as we wait for the Fed, as we wait for much of the above-mentioned Mag 7 to report and as we wait for Presidents Trump and Xi to meet in South Korea. The S&P 500 gained 1.23% on Monday as the Nasdaq Composite ran 1.86%. Small caps underperformed, with the Russell 2000 up 0.28% and the S&P 600 down 0.05%. Aside from the semis that supported the major indices, the Dow Transports gained 1.35% for the session, which could be seen as an economic positive ahead of those trade talks.
Ten of the 11 S&P sector SPDR ETFs closed out the day in the green, led by Tech (XLK) and the Discretionaries (XLY) . Only the Materials (XLB) ran the wrong way on Monday. Breadth was positive, but not overwhelmingly so. Winners beat losers by margins of 4 to 3 at the NTSE and 5 to 4 at the Nasdaq. Advancing volumes took shares of 69.7% and 63.9% respectively across the listings of the Nasdaq Market Site and the New York Stocks Exchange.
Aggregate trade was higher on a day over day basis, by 4.6% across those NYSE-listings and by 4.4% across those Nasdaq-listings. So, was Monday a reconfirmation of the bullish trend? Speaking purely technically? I guess so. But trading volume was lower than it was during last week's down days and there is just so much to our immediate front not to at least stay agile. Yes, I am on board for this rally and have remained so.
That does not mean that I am blind to the potential for some significant headline risk. I am also thinking that activity tails off a bit ahead of Jerome and the Powell family singers taking the stage tomorrow afternoon and then Thursday's festivities below the 38th parallel.
New Price Target for Palantir
Yes, Palantir reports next week, making this risky, but the chart says what the chart says. My readers know that of late, I had warned that these shares were possibly forming a Double Top pattern of bearish reversal. The shares have managed to base near that second top and consolidate. That threat, it appears, has passed.
In developing that sideways move, the stock has formed an Ascending Triangle pattern of bullish continuation with a $188 pivot. The stock tried to take and hold that pivot on Monday. What's obvious is that over the past few weeks, the swing crowd has worked both sides of the 21-day exponential moving average. More importantly, though, professional money appears to have defended the stock every time that the stock's 50-day simple moving average has been tested.
Relative Strength has rebounded out of neutral territory and is gaining upside momentum while not yet existing in a technically overbought state. The daily Moving Average Convergence Divergence is also improving. The histogram of the 9-day exponential moving average has crossed back into positive territory. In addition, the 12-day EMA crossed above the 26-day EMA on Monday with both of those lines still in positive territory. These are all short to medium-term bullish signals.
Price Target: $226 (Street-high, up from $218)
Pivot: $188
Add: down to the 50-day SMA (currently $172)
Panic: Loss of the 200-day SMA (currently $130)
Economics
(All Times Eastern)
08:55 - Redbook (Weekly): Last 5.0% y/y.
09:00 - Case-Shiller HPI (Aug): 1.9% y/y, Last 1.8% y/y.
10:00 - Richmond Fed Manufacturing Index (Oct): Expecting -14, Last -17.
4:30 - API Oil Inventories (Weekly): Last -2.98M.
The Fed
(All Times Eastern)
Fed Blackout Period.
Today's Earnings Highlights (Consensus EPS Expectations)
Before the Open: (AMT) (2.47), (GLW) (.66), (PYPL) (1.20), (SOFI) (.08), (UNH) (2.81), (UPS) (1.31), (W) (.44)
After the Close: (BE) (.10), LSTR (1.23), (STX) (2.40), (V) (2.97)
At the time of publication, Guilfoyle was long SOF, GOOGL, MSFT, NVDA, AMD, PLTR equity.
