Palantir Technologies (NASDAQ: PLTR) has been one of 2024’s top-performing stocks, surging to multiple new highs driven by the company’s advancements in artificial intelligence (AI).
This performance has outpaced the S&P 500 and positioned Palantir for further capital inflows, including its inclusion in the lucrative Nasdaq 100 index.
The stock has skyrocketed 376% in 2024, trading at $79.08 as of press time, with a record high of $84.
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For investors who missed the initial rally, Palantir’s technical setup may offer an opportunity to join the AI stock frenzy.
Specifically, stock trading expert Mike Investing has noted that greater opportunities may arise as Palantir approaches a potential correction, he said in an X post on December 29,
He noted that the stock is nearing a critical resistance zone around $88, which could trigger a final spike before a significant correction of 40% to 45%. Declining trading volume at these levels suggests weakening momentum, supporting this hypothesis.
“As we approach this zone I believe we have one final spike left before a major 40-45% correction. This will provide an amazing entry spot,” the expert said.
Why a correction might be ideal for PLTR stock
Interestingly, a potential correction would be welcomed, considering the uncertainty that has lingered around the equity despite its rally.
For instance, Blue Chip Chief Technical Strategist Larry Tentarelli previously warned that Palantir’s sustained upward momentum could deter new investors as it offered minimal entry options.
A correction would not only make the stock more accessible but also alleviate concerns about overvaluation. Some recent Wall Street analysis has suggested that Palantir’s current pricing reflects optimistic future growth expectations, which could lead to a sharp decline if those targets are unmet.
Another concern has been raised regarding the technology firm’s reliance on government contracts for revenue stability amid potential budget cuts.
Analysts’ take on PLTR stock price
Despite these risks, some analysts remain bullish on Palantir’s long-term potential. UBS has set a cautious price target of $80, acknowledging the company’s advancements in AI while warning of its stretched valuation.
Dan Ives of Wedbush Securities has dubbed Palantir the “Messi of AI,” citing its pivotal role in the sector and the broader wave of AI investments as key drivers for future growth.
At the same time, to drive more investor interest, Palantir continues to expand its footprint, securing significant milestones such as FedRAMP High Authorization, which allows its platforms to support sensitive U.S. government workloads.
The company also recently won a $618.9 million contract with the U.S. Army to enhance its data-driven decision-making platform, reinforcing its role in national defense and AI innovation.
In conclusion, a correction in Palantir’s stock would provide an ideal entry point for investors, offering a breather after its red-hot rally and allowing for a more sustainable upward trajectory. With the AI sector continuing to boom, Palantir remains well-positioned for long-term growth.
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