Palantir stock has imploded by over 35% from its November 2023 high as concerns about its valuation have risen. It was trading at $134.37 today, July 8, down from the record high of $207. This article explains why this may be a golden moment to buy PLTR ahead of its comeback.
Palantir Stock is Slowly Forming a Bullish Pattern
The weekly chart shows that the PLTR stock has retreated sharply in the past few months. It plunged from an all-time high of $207 to its current level of $134. Along the way, it has slowly formed a falling wedge pattern, a common bullish reversal sign in technical analysis.
This pattern consists of two descending, converging trendlines that are now nearing their confluence zone. Most recently, it formed a giant morning star candlestick, which often leads to a rebound. Notably, the lower side of the morning star coincided with the 50% Fibonacci Retracement level.
At the same time, the Average Directional Index (ADX) has slumped to 19 from last year’s high of 64.55. A declining ADX indicator signals that downward momentum is losing steam.
Therefore, the most likely Palantir stock forecast is bullish, with an initial target of $200, about 50% above the current level.
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Palantir Technologies Has Some Key Catalysts
There are a few reasons why PLTR stock may rebound despite its persistent overvaluation. First, there is a possibility of a sector rotation from fast-growing memory companies to software companies that have lagged the market this year.
Morgan Stanley’s Mike Wilson predicted that memory and semiconductor stocks will drop, and then investors will go bargain hunting in areas the market has neglected lately.
Second, Palantir’s business continues to see strong organic growth. It has not made any acquisition, and yet its annual revenue is expected to grow by 72% this year to $7.72 billion. It will then make over $11.2 billion next year, helped by commercial and government orders. For example, this week, the company announced that it was expanding its partnership with GBP Seguros, a Mexican insurance company.
Additionally, the company will play an important role as the US military and government departments embrace AI. The Trump administration is already requesting $1.5 trillion in defense spending. Some of these funds will go to Palantir, a company Trump has invested in before.
Analysts are also turning bullish on PLTR, with DA Davidson hiking its target from $165 to $175. Roseblatt also hiked its target to $225 a few months ago. The average target among analysts is $190, higher than the current $134.
