Palantir stock remains under pressure, reflecting the performance of other software companies such as Microsoft, Adobe, ServiceNow, and Intuit.
summary
- Palantir’s stock price has plummeted in recent weeks.
- The stock is forming an up-and-down pattern on the daily chart.
- Technical indicators such as moving averages and supertrend indicators point to further downside.
Shares in the technology company backed by Peter Thiel are currently down 10% since the beginning of the year. Economists expect the company’s next financial report, due to be released after the market closes on Monday, to be impressive.
All told, analysts expect fourth-quarter sales to rise 62% to $1.34 billion, thanks to the U.S. corporate segment attracting more customers. Earnings per share are expected to rise 64% to 23 cents.
If these estimates are correct, Palantir’s annual revenue will increase 53% from 2024 to $4.4 billion, making it one of the fastest-growing companies in the United States.
On the plus side, the company has a long history of beating expectations, so its numbers are likely to be better than most analysts expected.
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This growth is being driven by artificial intelligence platforms, commonly known as AIPs, that help companies integrate generative AI into their operations. It creates an AI operating system based on Palantir’s Gotham and Foundry product suites.
3 main risks
First, this result comes at a time when demand for AI companies is waning, as evidenced by the recent sharp declines in companies like Microsoft, Adobe, and ServiceNow.
Second, and most importantly, the company is one of the most overvalued companies in the US, with a forward price-to-earnings ratio of over 200, much higher than companies like Nvidia, Microsoft, and Amazon.
Consider the technical analysis below.
PLTR stock price chart |Source: TradingView
The daily timeframe chart shows that the PLTR stock has formed a near-perfect head-and-shoulders pattern, which often leads to further declines.
The headline is at an all-time high of $208, and the neckline is at $147, where it was trading before earnings. The distance between the head and neckline is approximately 30%.
If you measure the same distance from the neckline, it will eventually fall to $102. Before this happens, the stock will likely fall 20% to the 61.8% Fibonacci retracement level.
Another bearish factor for Palantir stock is that the stock price is below its 50-day and 100-day exponential moving averages and supertrend indicators. Also, the relative strength index and MACD indicator continue to decline.
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