Markets are still concerned that AI valuations are stretched. Leading recent AI losses, Palantir ( NASDAQ: PLTR) dropped, even after beating earnings estimates with solid guidance to boot. EPS of 21 cents beat estimates of 17 cents. Revenue of $1.18 billion was above estimates of $1.09 billion. While impressive, the market has become nervous about Palantir's valuation - especially as it trades at 200x forward earnings.
There are now almost 500 AI unicorns - companies valued at over $1 billion - worth a total of roughly $2.7 trillion, enough to do some serious damage to the economy if things don't go well. But for investors, that cash represents a dream: that AI will someday do more than generate video essays explaining that Nubian giants built the pyramids, and become a major financial driver.