After Palantir’s stock reached a new high, technical indicators suggest that there is more room for growth, but concerns are emerging about the sustainability of this momentum.
Currently, PLTR is trading at $44.86, briefly reaching an all-time high of $45, with a market capitalization exceeding $100 billion for the first time.
Palantir’s foray into artificial intelligence (AI) has contributed to its rally, with the stock up 170% year-to-date.
PLTR’s monthly chart reveals a bullish “cup and handle” pattern, indicating that it may aim for another high around $80 to consolidate its 2024 rally, according to stock trading expert SmartReversals. The “cup” represents a period of accumulation as Palantir’s price gradually recovered from 2022 lows to its current level. The breakout point at around $45.07 marks the upper resistance level. If the handle forms and Palantir breaks above this resistance, it could initiate a bullish push towards the $80 target. However, the formation of the handle is not guaranteed.
On the other hand, momentum indicators like the Money Flow Index (MFI) and Relative Strength Index (RSI) indicate overbought conditions at 83.18 and 77.23, respectively. These elevated levels suggest that the stock may face a short-term correction.
Despite the potential for a sell-off, PLTR’s possible push past $45 is likely to come from the company’s upcoming Q3 2024 earnings report, scheduled for November 4. Analysts expect Palantir’s AI products for government and commercial clients to build on the $678.13 million revenue recorded in Q2 2024, which saw a 27% year-over-year growth. The company’s full-year revenue guidance stands at $2.746 billion. Analysts like Dan Ives from Wedbush, who compares Palantir’s AI capabilities to Lionel Messi, support the optimistic outlook, anticipating increased demand for Palantir’s AI platform in 2025.
However, some dissenting voices argue that Palantir’s stock does not align with the company’s valuation. They believe that PLTR’s current price reflects expectations of future growth, and if the company fails to meet these projections, the stock may struggle.
In light of the ongoing valuation debate, stock market analyst Sammy McCallum believes that this should not be a concern, as Palantir has the potential to reach a market cap of $150 billion. He states, “Palantir breaking out probably sees it motor towards a $150B Market Cap in short order. Stop complaining about valuations. It’s an exponential growth company, and Wall St is only just waking up to it.”
McCallum also points out that PLTR has further potential for a breakout, citing the formation of a multi-year “cup and handle” pattern. This pattern resulted in a breakout after the stock surpassed the $30-$35 resistance range. Fibonacci extension levels indicate additional targets, with the next significant resistance near the 61.8% Fibonacci level at around $69.20.
Finally, for PLTR to continue its growth, the stock must establish $45 as a support zone before aiming for $50.
