Palantir Revenue Surges 93%, McDonald’s Still Has a Traffic Problem

**Zaid Admani** (0:00)
Public.com presents The Rundown, your daily market update in 10 minutes. My name is Zaid Admani, and today is Tuesday, August 4th. In today's episode, I'll tell you why stocks are closing in at all time highs. I'll also recap Palantir's blowout earnings and tell you why McDonald's turnaround plan is still a work in progress. Then stick around to the end of the show to find out how AI models from OpenAI and Anthropic accidentally hacked into real companies. We got a great show for you today.
Let's go.
Stocks started the week with a monster rally on Monday. The S&P 500 jumped 1.5% and the NASDAQ surged 2.1%. And I have to give a shout out to the Dow. It added 1.3% and closed at record highs, but still don't care about the Dow, so. There seems to be two big catalysts right now carrying this rally. Oil and earnings. Let's talk about oil first. Investors are getting increasingly optimistic that the US and Iran will reach another agreement to reopen the Strait of Hormuz. In fact, Treasury Secretary Scott Bessent went on CNBC this morning and said a deal could come as soon as today or tomorrow that would allow commercial ships to move freely through the Strait of Hormuz. Those comments sent oil prices tumbling. Brent Crew dropped below $80 a barrel for the first time since July 10th. Now, the other big driver of the rally seems to be the strong earning season. We're about halfway through this earning season and the numbers have blown expectations out of the water. Wall Street expected around 25% profit growth, but companies are delivering close to 35 to 40% profit growth. So investors are starting to be increasingly optimistic about the economy again. And there's also some spark back in the AI rally as well. A lot of the AI names were up big yesterday, especially the Mag-7 stock. And you know, AI continues to be a big driver of economic growth. Oxford Economist estimate that AI investments alone have generated nearly one quarter of recent US economic growth. So the market is basically pricing in the best of both worlds right now, that the AI boom keeps accelerating while the geopolitical threat starts fading away. The good vibes continue today. I'm recording this right after market open and I'm seeing a lot of green across the board. In fact, the S&P could close at record highs today if this rally doesn't fade. And we have a big day coming up because AMD and SpaceX are reporting earnings today after the bell. Those are going to be huge. We're going to break those down on tomorrow's show. So definitely get subscribed to the podcast if you haven't already and tune in every day to stay in the loop.
Let's run through some headlines. Starting with Palantir. Palantir stock is ripping higher this morning after the company delivered what CEO Alex Karp called an other worldly quarter. And he might not be exaggerating. Revenues nearly doubled from a year ago, jumping 93% to $1.94 billion and profits more than tripled to over a billion dollars as well. And the number that's getting everyone's attention is the US commercial revenue. That business surged 149% to $764 million. See, Palantir is best known for selling data analyst software to the US military and intelligence agencies all over the world. But their commercial business is now growing even faster as companies try to figure out how to actually deploy AI inside their operations. And what Palantir software does is connect the company's scattered data and organizes it, and it lets companies build AI applications on top of that information to unlock insights. The pitch is that instead of employees just dumping sensitive corporate data directly inside chat, GPT or cloud, Palantir gives businesses more control over where that data goes and which AI models they use. So corporate America is buying that pitch and that business segment is surging right now. And the government business is also doing great. US government revenues jumped 90% to $809 million. The company is firing on all cylinders and looking ahead, they raised their full year revenue forecast by roughly half a billion dollars. And that's why Palantir stock is up around 15% this morning at the time of this recording. Now remember, Palantir came into these earnings down 29% on the year because Wall Street was worried that OpenAI and Anthropic might end up eating their lunch. Both OpenAI and Anthropic are building out their enterprise business at a really fast pace. But I gotta say, CEO Alex Karp has done a great job making the case for Palantir being the layer that connects a company's proprietary data with the AI models so companies don't end up giving their data directly to OpenAI and Anthropic. Alex Karp is making the case that OpenAI and Anthropic will train their models based on a company's data and end up stealing that company's business. Obviously, Karp is talking up his book, but I think it's an effective talking point. And he's not the only one making this case. Microsoft CEO Satya Nadella has been warning about the same thing. So it just shows you how worried the established tech companies are by the threat from OpenAI and Anthropic. It seems like the threat from OpenAI and Anthropic isn't slowing down Palantir at this point. So we'll see if this strong quarter will lead to a bounce back for the company in the second half of the year. Let's shift gears from AI and talk about a good old fashioned business like McDonald's because they also reported earnings this morning and it was a mixed bag. Revenues for the quarter grew about 4% to $7.1 billion, which came in slightly below expectations but adjusted earnings came in at $3.38 per share, slightly beating Wall Street estimates of $3.32 per share. When you dig a little deeper though, global same store sales grew 1.3%, but US same store sales rose just 0.8%. And even that growth was driven by customer spending more per order. Traffic to US restaurants actually declined in the quarter. Now McDonald's has been pushing these higher margin beverage items like dirty sodas, which personally I'm not a fan of. I don't understand how anyone likes that kind of stuff, but those items have pushed up revenues per order. Now in order to spark a turnaround, the company announced a leadership shakeup of the US business. They're bringing in Skye Anderson to run the division. He's been at the company for 26 years. So we'll see if Mr. Anderson can spark some growth here in the US. Here's a suggestion for Skye Anderson. Maybe bring back the Breakfast Parfait, because personally that was my favorite item from back in the day. The market didn't hate these earnings. Shares of McDonald's are up around 2% this morning at the time of this recording. But if you zoom out though, the stock has declined 13% on the year.