After a meteoric rise in 2024, fueled by its focus on the booming artificial intelligence (AI) sector, Palantir’s (NASDAQ: PLTR) share price has faced a rough start to 2025 amid concerns of an accelerated slump.
The gains culminated with Palantir stock hitting a record high of almost $85. However, the recent price movement has been underwhelming, with PLTR share price experiencing an extended losing streak.
However, Palantir showed strength by press time, rising over 4% to trade at $65.17 despite sustaining losses of 4.4% over the past five days.
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One lingering concern about Palantir’s rise in 2024 was its valuation. Some market participants suggested that speculation and future growth expectations drove the momentum.
As a result, the stock was at risk of collapsing if the software company failed to meet its growth targets. With bullish sentiment currently subdued, questions remain about a potential slump that could retest the crucial $50 support level.
Wall Street’s take on Palantir stock
In analyzing this possibility, one area to look for is insights from Wall Street analysts who have issued a mixed outlook on the technology company. While some argue that the AI sector’s ongoing demand bodes well for the company’s future, others foresee further corrections due to valuation concerns.
For instance, as reported by Finbold, Jefferies analyst Brent Thill expects Palantir to drop significantly, setting a price target of $28 and reiterating his “Underperform” rating. Thill raised concerns over the firm’s valuation, volatility, and insider selling. He also warned of potential “multiple compression” as market sentiment shifts amid growing AI and data analytics competition.
Similarly, Morgan Stanley downgraded Palantir in early January to “Underweight,” citing overvaluation following a 340% stock surge in 2024. The firm set a $60 price target, noting limited upside despite strong performance in Palantir’s government and commercial segments. Analyst Sanjit Singh pointed out the company’s success with its AI platform, cost control, and deal momentum but questioned its future growth potential.
Another bearish sentiment came from Deutsche Bank, which sees Palantir trading below the $50 mark despite its recent record highs. Specifically, in a January 8 investor note, the bank increased Palantir’s price target from $26 to $35 but maintained a “Sell” rating. While acknowledging Palantir’s potential in AI software, the firm was cautious about scaling efficiency debates.
Interestingly, a consensus among 17 Wall Street analysts projects Palantir trading below $50 in the next 12 months. According to estimates shared on TipRanks, the software company is expected to trade at $46.57, a drop of over 30% from its current valuation.
Notably, Wall Street is not unanimously bearish on Palantir. For instance, Wedbush Securities analyst Dan Ives, who labeled the stock the “Messi of AI,” set a price target of $75. He predicts Palantir will lead the AI software space, especially under policies from the second Donald Trump administration.
PLTR stock technical outlook
From a technical perspective, some market participants maintain that Palantir’s current correction is a healthy pullback after a red-hot run. For example, pseudonymous analyst The Long Investor noted in a January 13 post that the current price action is normal and follows established chart patterns.
The expert pointed out that Palantir is revisiting key Fibonacci levels that are critical for a healthy uptrend. The 0.382 Fibonacci retracement at $64.68 and the 0.618 retracement at $49.60 are potential support areas where buyers may step in.
Furthermore, the stock remains comfortably above its 200-day moving average, which sits near $36.00, supporting a long-term bullish case.
What next for PLTR stock
Looking ahead, Palantir is set to release its Q4 2024 earnings on February 3, 2025, a potentially pivotal moment for the stock’s trajectory.
While the company has shown robust revenue growth, particularly in its U.S. commercial business, its high valuation, trading at multiples far beyond industry peers, has raised skepticism.
To avoid a further slump, Palantir needs to demonstrate growth, profitability, and operational efficiency to convince investors of its long-term value.
Featured image via Shutterstock
