An analyst has highlighted key Palantir’s (NASDAQ: PLTR) stock technical indicators for potential investors to watch as the equity reaches new highs.
Notably, Palantir’s recent highs have mainly been driven by investor enthusiasm surrounding the company’s advancements in artificial intelligence (AI). These inroads into AI have led Palantir to secure notable partnerships, key to boosting the company’s financials.
As of Christmas Day, PLTR was valued at $82.88 after hitting a record high of $84 during early trading hours on December 24. These new highs have contributed to PLTR’s 396% year-to-date return.
Picks for you
Although Palantir has generally had an impressive year, the stock gained momentum in November after the company reported a 30% year-over-year revenue jump. CEO Alex Karp said the growth is mainly due to the “unrelenting” AI demand from government and commercial clients.
This growth comes as the company seeks to solidify its key U.S. government contractor position with several lucrative deals on the line. For instance, Palantir extended its partnership with the U.S. Army through 2028, valued at up to $619 million.
At the same time, the technology firm is reportedly in talks with SpaceX, OpenAI, and Anduril to form a defense consortium. The consortium aims to secure U.S. government contracts and could launch publicly by January.
Is PLTR stock worth buying now?
Now, Blue Chip Chief Technical Strategist Larry Tentarelli has warned that PLTR’s recent price movement makes it challenging to purchase.
In an X post on December 24, the analyst noted that Palantir has soared over 174% since its last meaningful pullback to the 50-day simple moving average (SMA) in September.
This impressive uptrend highlights a key characteristic of strong stocks—minimal retracements. Palantir’s price action suggests that the strongest performers often refuse to dip back to significant levels like the 50-SMA, making it challenging for investors to find attractive entry points.
“PLTR is +174% since the last near pullback to the 50-sma in September. The strongest stocks don’t always pullback to the 50-sma, or really at all, and won’t make it easy to buy,” the analyst said.
Based on this analysis, it can be deduced that with PLTR steadily climbing, investors awaiting pullbacks to get involved may find themselves sidelined, making it difficult to secure an entry point.
Notably, several elements are likely to help Palantir’s stock rally further. For instance, the firm’s recent inclusion in the lucrative S&P 500 index could trigger more institutional capital to flow into the stock.
Palantir’s listing on the tech-heavy Nasdaq and subsequent inclusion in the Nasdaq 100 are considered bullish factors likely to drive capital into the stock.
What next for PLTR stock price?
While Palantir appears unstoppable based on recent momentum, lingering concerns remain regarding the stock’s future growth.
One caution area is the company’s valuation, with some market players suggesting that the current price might already be pricing in future growth. If the company fails to meet growth projections, the stock could plunge.
On this note, Wall Street analysts have offered a mixed outlook for the stock. For example, Dan Ives of Wedbush Securities, who calls PLTR the “Messi of AI,” anticipates further growth, highlighting the company’s leadership in the AI software sector.
In late November, Bank of America (NYSE: BAC) echoed a bullish outlook for Palantir, raising the price target from $55 to $75 while maintaining a ‘buy’ rating. The company cited expectations of continued growth in its data analytics and software business.
Meanwhile, Mizuho’s Gregg Moskowitz raised Palantir’s price target to $44 from $37 but kept an ‘underperform’ rating, citing higher comp multiples and trends in AI, data analytics, and digital transformation. The firm sees a balanced risk/reward for the industry in 2025.
William Blair maintained an ‘underperform’ rating on Palantir, citing concerns over revenue projections. Despite 24.5% growth and 81.1% profit margins, Palantir is expected to miss its $4.5 billion target by over $700 million.
In conclusion, while Palantir’s momentum remains strong, the stock’s high valuation and limited pullbacks present challenges for new investors. Therefore, its ability to meet ambitious growth targets will determine if it can sustain its upward trajectory into 2025.
Featured image via Shutterstock
