Palantir Technologies boosts outlook as AI demand drives strong Q1 beat

Market Performance

South African Market Summary

South African equities closed weaker yesterday, with the JSE All Share index down 0.45% at 114,660.79 points and the Top 40 index losing 0.50% to 106,695.39 points. The pullback came despite an improvement in domestic manufacturing conditions, as the seasonally adjusted Absa PMI rose to 52.6 in April from 49.0 in March, marking the first expansion since September 2025. Business activity recovered to 52.8 from 46.1, while new sales orders improved sharply to 52.9 from 44.5. However, Absa cautioned that part of the rebound may reflect demand being brought forward ahead of anticipated price increases. Separately, NAAMSA reported a 13% year-on-year rise in April new vehicle sales.

European Market Summary

European equities fell on Monday as escalating Middle East tensions pushed crude oil prices higher and renewed concerns over inflation and monetary tightening. The pan-European STOXX 600 declined 1.0% to 605.51 points, marking its sharpest one-day fall in about a month. Eurozone banks were among the hardest hit, losing 2.7%, their biggest daily decline in more than six weeks, while automakers dropped 2.1% after US President Donald Trump threatened to raise tariffs on EU cars and trucks to 25%. Data added to caution, with German manufacturing sentiment turning negative in April for the first time since October 2024. Bundesbank President Joachim Nagel warned that the ECB may need to raise rates in June.

US Market Summary

Wall Street ended lower on Monday, with the S&P 500 retreating from record highs as renewed Middle East tensions weighed on risk appetite and overshadowed strong first-quarter earnings. Sentiment deteriorated after a South Korean merchant ship was hit by an explosion in the Strait of Hormuz, reinforcing concerns over energy security and global shipping disruptions. Energy stocks advanced as oil-related risks intensified. Investors also digested Berkshire Hathaway’s disclosure that it was a net seller of equities for a 14th consecutive quarter, underscoring caution around valuations. Separately, the US Treasury raised its second-quarter borrowing estimate to $189 billion, $79 billion above its February projection, reflecting weaker cash flows. Trading volumes remained relatively light across US exchanges.

Asian Market Summary

Asian equities weakened on Tuesday as investors monitored fragile US-Iran truce efforts while hostilities around the Strait of Hormuz continued to disrupt risk sentiment and cost expectations. In Australia, Wesfarmers warned it was raising some product prices as higher freight and fuel costs linked to the Iran conflict pressured margins, with fuel surcharges from shipping and domestic transport providers having the largest impact. In India, manufacturing momentum improved only modestly, with the HSBC India Manufacturing PMI rising to 54.7 in April from 53.9 in March, but remaining near a four-year low as softer demand and elevated input costs weighed on activity. In Japan, authorities remained on intervention watch after Finance Minister Satsuki Katayama cautioned against speculative foreign exchange trading.

Commodity Market Summary

Gold prices rose on Tuesday, rebounding from a more than one-month low, although gains were capped by elevated oil prices, which sustained inflation concerns and complicated the US interest rate outlook. Oil prices eased more than 1% after rising as much as 6% in the previous session, as signs that the US Navy was loosening Iran’s grip on the Strait of Hormuz helped ease supply disruption fears. Maersk said a US-flagged vehicle carrier had exited the Gulf through the strait under US military escort. However, risks remained elevated after Iran launched further Gulf attacks, with several commercial vessels reportedly struck and a UAE oil port set ablaze, underscoring persistent geopolitical supply risk.

 Currency Market Summary

The South African rand weakened on Monday, pressured by a firmer US dollar and higher oil prices as escalating US-Iran tensions weighed on global risk appetite. The dollar drew safe-haven support as renewed strikes in the Gulf tested a fragile truce and kept investors cautious. Inflation concerns remained elevated after the closure of the Strait of Hormuz, a key route for around a fifth of global oil flows, sustained an energy shock and kept crude prices largely above $100 a barrel. The yen was steady on Tuesday, with markets alert to further Japanese intervention after suspected action by Tokyo last week. The Australian dollar was little changed ahead of an expected Reserve Bank of Australia rate hike.

Domestic Company News

Vodacom Group Limited (VOD) +0.18%

Vodacom expects to report strong earnings growth for the financial year ended 31 March 2026, consistent with its Vision 2030 ambition of delivering double-digit EBITDA growth. The group anticipates earnings per share (EPS) to increase by between 20% and 25% from the 859 cents reported in the prior year, implying a range of 1 031 cents to 1 074 cents. Headline earnings per share (HEPS) are also expected to rise by 20% to 25%, from 857 cents previously, translating to a range of 1 028 cents to 1 071 cents. The trading statement remains unaudited, with full-year results expected on SENS on or about 11 May 2026.

KAL Group Limited (KAL) +2.09%

KAL Group expects stronger interim earnings for the six months ended 31 March 2026, supported by solid operational momentum across key revenue streams. Recurring headline earnings per share (RHEPS) are expected to rise by 13.1% to 17.1% to between 445.38 cents and 461.12 cents, while headline earnings per share (HEPS) are forecast to increase by 10.5% to 14.5% to between 433.51 cents and 449.21 cents. Growth was mainly driven by gross profit gains, underpinned by a 4.8% increase in retail revenue, 7.4% growth in agri input revenue and a 6.7% rise in fuel volumes. EPS is expected to increase by 28.3% to 32.3%, boosted by the Agriplas disposal profit. Results are expected around 14 May 2026.

Global Company News

 Palantir Technologies Inc. (PLTR) +1.36%

Palantir Technologies raised its fiscal 2026 revenue guidance after first-quarter results exceeded expectations, underscoring robust demand for its AI-driven data analytics platforms across US government and commercial clients. The company now expects revenue of $7.65 billion to $7.66 billion, up from prior guidance of $7.18 billion to $7.20 billion. First-quarter revenue rose 85% to $1.63 billion, ahead of estimates, while adjusted EPS of $0.33 also beat expectations. US commercial revenue surged 133% to $595 million, with US government revenue up 84% to $687 million. Demand continues to benefit from AI adoption in defence, including Palantir’s Maven system, which is set to become a Pentagon programme of record.

GameStop Corporation (GME) -10.14%

GameStop CEO Ryan Cohen’s proposed $56 billion takeover of eBay drew scepticism from investors and analysts, with eBay shares trading well below the $125-per-share offer price. The bid, structured as half cash and half stock, would see the smaller GameStop attempt to acquire a business nearly four times its market value, supported by its existing cash, a 5% eBay stake and potential debt financing from TD Securities. Cohen argues that GameStop’s cost-cutting strategy and store network could improve eBay’s competitiveness, particularly in collectibles and used goods. However, analysts questioned the funding structure, strategic fit and potential dilution, while Michael Burry criticised the deal and disclosed he had exited GameStop.

Paramount Skydance Corporation (PSKY) +0.36%

Paramount Skydance reported a stronger first-quarter performance, with adjusted EBITDA rising 59% year-on-year to $1.16 billion, supported by streamlined operations, merger-related cost savings and improved results in streaming and studios. Revenue increased 2% to $7.35 billion, while adjusted profit of $0.23 per share exceeded expectations of $0.15. The update follows Paramount Skydance’s $110 billion agreement to acquire Warner Bros Discovery, aimed at increasing scale across film and television. Streaming remained a key growth driver, with revenue up 11% and Paramount+ subscribers reaching 79.6 million, helped by Ultimate Fighting Championship content. However, second-quarter revenue guidance of $6.75 billion to $6.95 billion came in below market expectations.

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