Down 19% from Highs, Is It Too Soon to Buy Palantir Stock?

Palantir Technologies (PLTR) has experienced a remarkable 65% stock surge over the past three months, driven by another set of strong financial results - including 36% year-over-year revenue growth to $828 million in Q4. The company's artificial intelligence platform (AIP) has been instrumental in driving commercial adoption and growth, contributing to an impressive 340% gain in 2024 and a year-to-date increase of over 30%.

Why is PLTR Stock Down?

More recently, though, PLTR has pulled back sharply. Reports of potential Pentagon budget cuts affecting the IT and intelligence sectors have emerged, raising concerns about a key source of revenue for Palantir. Additionally, CEO Alex Karp disclosed a trading plan that could result in the sale of up to 48.9 million shares worth approximately $1.23 billion. 

PLTR stock is now down more than 19% from its Feb. 19 intraday high. As a result, the stock is no longer short-term overbought, based on its 14-day Relative Strength Index (RSI). This metric has dropped from 80 a few days ago to its current reading around 52.

Plus, PLTR is resting above its 20-day moving average and the round $100 level, which could potentially step up as short-term support. This follows a recent break above its upper Bollinger Band, suggesting Palantir stock was extremely overbought - and probably overdue for a pullback.

How Do Analysts Rate Palantir?

Loop Capital's recent "Buy" rating and $141 price target highlight the company's potential as a transformative AI software player, and Wedbush has argued the case for Pentagon budget cuts giving Palantir a boost, rather than harming the company.

However, many experts - including Jefferies' Brent Thill - continue to express concerns about the stock's premium valuation, with a forward adjusted price/earnings (P/E) ratio exceeding 190x. Wall Street analysts maintain an average price target of $81.82, which represents a discount of more than 19% to Friday’s close.

Is PLTR Stock a Good Buy Right Now?

The company's financial metrics show promising trends, with a 9.2% return on equity and net income growth of 54% over five years, while accelerating free cash flow growth and expanding margins continue to exceed analyst expectations. 

However, for long-term investors, it might be prudent to wait for a better entry point or consider establishing a small position and averaging in over time, rather than making a large investment at current levels.

This article was generated with the support of AI and reviewed by an editor. On the date of publication, the editor did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.