Palantir Technologies Inc. (PLTR) Shows Short-Term Momentum Despite Overvaluation, 2 weeks ago

Palantir Technical Analysis

Palantir Technologies Inc. (PLTR) closed at $25.88 on July 01, 2024, marking a 2.17% increase. The stock traded within a range of $25.145 to $26.02, edging closer to its 52-week high of $27.50. With an RSI14 of 66, the stock is approaching overbought territory, suggesting potential for a short-term pullback. Despite this, the MACD over the last three months is positive at 1.33, indicating bullish momentum.

PLTR's price currently trades above both the 50-day ($22.52) and 200-day ($20.18) moving averages, reflecting sustained upward momentum. The volume of 32.69 million is below the average volume of 42.22 million, indicating lower trading activity. The ATR of 3.85 suggests moderate volatility.

Given these indicators, PLTR may experience minor fluctuations due to overbought conditions but is likely to maintain its upward trajectory in the near term.

Fundamental Analysis

With a market capitalization of $55.13 billion, Palantir Technologies is a significant player in the big data and AI industry. Its EPS of $0.12 results in a high P/E ratio of 215.67, making it pricey compared to the sector average. The intrinsic value, derived from a DCF valuation, stands at $0.628, significantly below the current trading price, implying overvaluation.

Palantir has been gaining attention as a major AI player. Recent news highlights momentum from its 'AI halo' and expansion into the commercial sector. Despite positive sentiment, analysts predict a 15% decline in stock price, tempered by Palantir's strong performance and accelerated revenue growth. Shares have risen 40% year-to-date, benefiting from the AI growth narrative.

However, analyst targets seem polarized, with a high of $35 and a low of $4.50. The consensus target stands at $16.17, considerably lower than the current price, introducing caution about the stock’s valuation sustainability.

Palantir Short-Term Price Predictions

For the next trading day (July 02, 2024), PLTR is expected to slightly retract due to its high RSI14, targeting support near $25.21. However, bullish momentum evident from the MACD might slightly offset this, keeping prices closer to the $25.88 mark.

For the upcoming week, PLTR could hover around the high $25s to low $26s. Any breaches above its year-high might be subdued by profit-taking and analyst sentiment predicting a potential fall.

Intrinsic Value and Long-Term Investment Potential

The intrinsic value calculation of $0.63 suggests significant overvaluation compared to the current price of $25.88, casting doubt on long-term value investment. Yet, Palantir's expansion into commercial applications and the AI industry's explosive growth present potential growth opportunities.

While immediate numerical valuations suggest a cautious outlook, qualitative factors like sector growth and revenue performance might make long-term prospects attractive, provided earnings catch up to the current pricing levels.

Overall Evaluation

Based on the amassed data and market sentiment, Palantir Technologies Inc. (PLTR) categorizes as a 'Hold' candidate. This status factors in strong short-term momentum, offset by high valuation multiples and expected near-term volatility. Long-term potential hinges on Palantir's ability to sustain revenue growth and substantiate its high market valuation in a rapidly evolving AI landscape. The mixed analyst outlook further reinforces a cautious stance.

Check full Palantir forecast and analysis here.