Palantir stock has been in a strong bull run since bottoming at $105.95 in June. It surged to a record high of $212 as investors cheered the company’s second-quarter earnings report. More recently, however, the uptrend has stalled, with the stock sliding to a low of $184 as AI-related shares came under pressure. The stock has formed a cup-and-handle pattern, pointing to more gains in the near term.
Palantir stock technicals suggest the rally will continue
Technical analysis suggests that the PLTR stock has more upside to go. It bottomed at $105 in June and then started a slow upward trend. Along the way, the stock formed what looks like a cup-and-handle pattern, which is a common bullish continuation sign in technical analysis.
This pattern is made up of a rounded bottom with a key resistance level, which, in this case was at $206, its highest point in November last year. The recent pullback was part of the handle section.
The stock has remained above the Supertrend indicator, while the two lines of the MACD indicator have continued rising. They have jumped to the highest level since December last year.
Therefore, the path of the least resistance for the stock is bullish, with the initial target being the upper side of the cup at $206. A move above that level will point to more gains, potentially to the psychological level of $250. On the other hand, a drop below the support level of $175 will invalidate the bullish outlook.
Palantir Technologies has bullish catalysts
PLTR stock will benefit from the numerous bullish catalysts. The most important is that there are signs that the US government and companies are embracing its products, which include Gotham, Foundry, and the Artificial Intelligence Platform (AIP).
Gotham is used by government agencies like the military, intelligence agencies, police and immigration services. Its software receives vast amounts of data, which these agencies use to make decisions.
Foundry, on the other hand, is the commercial arm of Palantir. It is built on a technology known as Ontology, which maps an organization’s people, assets, and events. Companies use it to gain intelligence, which helps them to allocate resources properly and grow sales.
Launched in 2023, AIP is Palantir’s AI product. It lets companies point an AI model at its own operational data and then take action inside real workflows.
All these products are seeing strong demand as evidenced by its recent results. The numbers showed that its quarterly revenue jumped by 93% in the second quarter to $1.57 billion, driven by the US commercial segment, which made $764 million. US government revenue rose by 90% to $809 million, possibly because of its role in the immigration department.
Most importantly, there are signs that Palantir’s growth is continuing. Analysts expect that its third-quarter revenue rose by 84% in Q3 to $2.18 billion, with the most optimistic expecting it to hit $2.26 billion. For the year, the revenue is expected to jump 83% to $8.2 billion, followed by $12.3 billion next year.
These metrics may help to justify Palantir’s high valuation, with its forward price-to-earnings ratio of 114, which is much higher than that of other companies. In contrast, the S&P 500 Index has a multiple of 19, while companies like Micron and Nvidia have multiples of 5 and 22, respectively.