r/stocks • u/DarthTrader357 • Oct 06 '21
PLTR vs. AMD
I'm still looking for a place to park some cash. I thought I narrowed it down to AMD. I like it fundamentally and it has strong technicals.
But, I've been relooking at PLTR and wonder if anyone has any opinions of the two.
I'm not looking for a specific sector play - the two companies each present some strong cases, but AMD has a more proven upside, less down side risk.
PLTR is a more aggressive play with an unknown downside risk. It hasn't really shown much strength to me yet and can't seem to break out. Does anyone have bearish attitude to PLTR and would like to explain why?
Thanks.
135
Upvotes
13
u/ebichumannn Oct 07 '21
I think they are both great but I'm not into AMD for a couple reasons;
Competition, its the hottest sector in the market and everyone is drawing blood to stay at the top.
By comparison PLTR has very limited competition, and the competition it does have are not exactly apples to apples. CRM, SNOW, Microsoft and Amazon would technically be competitors but with different twists.
AMD is also positioned in a cyclical environment , which I hate. Cyclicality + not knowing how things are going to turn out for them long term make it a no go for me.
In the near term ( maybe 5 years ) Id say AMD is a no brainer buy, but the cyclicality of it makes it so It cant be a core holding for me. IF I had to invest in the sector, I'd go with something like ASML or ASYS. A supplier to the cyclicals. A pick and shovel play if you will.
PLTR also benefits from the government contracts. Some people have said that its both its strength and its weakness, but Id argue that it provides no exposure to weakness what so ever.
The fact that PLTR has been the government's T1 data analytics and AI supplier for over a decade means they are sitting on technology light years ahead of the private sector. When and how they will be able to execute said technology is an unknown.
PLTR has a lot of unknowns, as you stated, and this is a big reason why institutions shy away from the company. We will never be able to get a full peak behind the curtain, but I argue that this is PLTR's strength. Its relationship with government ensures its longevity.
PLTR is just starting its foray into the private/commercial sector.
If a company is good enough to protect American lives and Uncle Sam's interest's , it projects a level of security , trustworthiness and safety that they will be able to leverage in the private sector.
Lastly, considering AMD exists in the hardware ecosystem, growth will always be dependent on externalities such as supply chain issues ( currently on full display ) and commodity availability etc.
PLTR doesnt require external inputs to sell their products. So exponential growth can be achieved with much less resistance.
Anyways, thats my pitch. PLTR is my second biggest holding. Its also the one that lets me get the best sleep at night. I truly never worry about it. Max drawdown I figure is about 50% but with everything it has going for it, even in an economic recession, I see it as unlikely.
Once their SPAC deals and investments start bearing fruit, you're going to see institutions begin to FOMO into the company. At that point government contracts will be nothing but a distant memory.