Palantir Technologies (PLTR) Stock: Technical Analysis Points to Bullish Outlook

TLDR

Table of Contents

PLTR stock maintained key technical levels during recent market pullback
Technical analyst Larry Tentarelli expects PLTR to be a market leader as stocks recover
Palantir’s revenue growth has accelerated since launching its AIP platform in 2023
Commercial customer count grew 43% to 711 in Q4 2024
Current P/S ratio of 81 and P/E of 500+ raise valuation concerns

Technical Strength Amid Market Volatility

Palantir Technologies has shown remarkable technical resilience during recent market turbulence. According to Larry Tentarelli, chief technical strategist at Blue Chip Trend Report, PLTR stock maintained its position above its 100-day moving average during the market’s recent pullback.

This technical strength is particularly noteworthy. Tentarelli told Schwab Network that Palantir was “the only major AI stock” that didn’t fall below its 200-day moving average during the correction.

Based on these technical indicators, Tentarelli believes PLTR is positioned to be one of the market “leaders” as stocks recover. This assessment comes as investors closely watch AI-related stocks amid broader market volatility.

Growth Story Underpins Investor Interest

Palantir’s business growth has been impressive in recent quarters. The company builds custom software applications using analytics, machine learning, and artificial intelligence for both government and commercial customers.

Their software transforms organizational data into actionable insights in real-time. This flexibility allows Palantir’s technology to serve diverse use cases across industries.

Applications range from supply chain optimization to hospital management. Their systems also support financial fraud detection and military intelligence operations.

Growth has accelerated notably since mid-2023. This coincides with the launch of Palantir’s AIP platform for AI applications.

The company’s commercial customer base expanded 43% in the fourth quarter of 2024. They now serve 711 customers across various sectors.

Revenue from U.S. government contracts grew 30% year-over-year in Q4 2024. This segment generated $1.2 billion last year, showing strength in Palantir’s original core market.

Valuation Concerns Persist

Despite the company’s growth trajectory, valuation metrics raise significant questions. PLTR stock has risen approximately 1,400% since early 2023.

During the same period, trailing-12-month revenue increased by only 40%. Net income grew 213%, which is substantial but still lags far behind the stock price appreciation.

The current price-to-sales ratio stands at 81. This represents a premium valuation even among high-growth tech stocks.

For comparison, Nvidia, widely considered the dominant AI stock, peaked at a P/S ratio of 45. Palantir trades at nearly twice that level.

Palantir’s price-to-earnings ratio exceeds 500. Analysts estimate long-term annual earnings growth around 25%, making this multiple difficult to justify on fundamentals alone.

Stock-based compensation represents another potential concern for investors. Palantir’s trailing-12-month stock-based compensation totals $691 million.

This figure represents approximately 24% of revenue. By comparison, Nvidia’s stock-based compensation is just 3.7% of trailing sales.

Such high levels of stock-based compensation can lead to share dilution. This may potentially impact per-share financial metrics and returns over time.

Recent market volatility tested PLTR’s stock price. The shares experienced a 40% decline from recent highs during the February correction.

However, the stock has already recovered approximately half those losses. This resilience aligns with Tentarelli’s technical outlook for the shares.

The broader market may face “wide trading ranges” through early April. Tentarelli expects more clarity after April 2, when the Trump administration releases details about tariff policies.

He suggests increased certainty about policy directions could provide a more “bullish” stage for the market overall. As he noted, “Once we know what the numbers are, I think you’ll see some relief.”

For Palantir specifically, the company’s established leadership in practical AI applications positions it for continued growth. The addressable market remains substantial with significant room for expansion.

There are approximately 20,000 companies with at least 500 employees in the United States alone. This represents considerable growth potential for Palantir’s commercial business.

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