Palantir Stock Has Missed the Market Rally. Here’s What the Charts Suggest Could Be Next

Palantir has been noticeably quiet since its August pullback, but that calm might be setting the stage for a big move. From both a technical and fundamental perspective, the data analytics and AI powerhouse looks ready to break resistance and potentially rally toward $200 either just before or shortly after its earnings report on November 3.

‍

Back in August, Palantir, along with other high-growth AI-focused names and the broader Nasdaq, saw sharp declines amid worries about stretched valuations. Since then, trading activity has been subdued, with lower volume and volatility a pattern that often precedes a breakout move.

‍

I’ve been actively trading Palantir through our fast-moving “Active Opps” portfolio, but recently decided to include it in our more deliberate growth-focused portfolio during the September 15 rebalance. Unless a major new development emerges, I plan to hold onto the stock for the foreseeable future.

‍

Palantir sits at the forefront of the AI and data analysis industry arguably one of the most innovative and opportunistic companies in the software space. If Nvidia represents the cutting edge of AI hardware, Palantir is its software counterpart.

‍

The company’s total addressable market is massive. Its foundation is built on long-term, high-value government defense contracts that provide stability, while its expansion into commercial markets including healthcare, finance, manufacturing, and energy opens up new layers of growth potential.

‍

Despite its lofty valuation, Palantir’s financial performance has been steadily improving. The company trades at around 181 times projected 2026 non-GAAP earnings of $0.85, which is undeniably expensive.

‍

Yet, it’s also generating substantial free cash flow roughly $1.1 billion this year, with forecasts calling for that figure to nearly double to $2 billion next year. Free cash flow margins are expected to stay comfortably above 40% for the foreseeable future. Revenue continues to rise steadily, with projections showing 48% topline growth and an impressive 131% GAAP EPS increase by 2026.

‍

To be clear, Palantir’s valuation is sky-high, and expectations are equally elevated. At a $430 billion market cap, the company is priced for exceptional performance. But with CEO Alex Karp at the helm, there’s a credible path to scaling into that potential. It’s worth noting that Nvidia once traded at similarly aggressive valuations before hitting its stride and we all know how that story turned out.

‍

For high-growth, AI-centric companies like Palantir that have yet to reach full profitability, success hinges on two factors: confidence in the fundamentals particularly sustained revenue growth and a disciplined approach to technical analysis that balances risk and reward.

‍

Looking at the technical setup, Palantir has solid support near the $160 level, coinciding with the 20-week moving average (roughly the 100-day MA) and a parallel channel that’s been in place since mid-2024. Holding above that zone is key, especially as growth stocks take a breather amid broader macro uncertainty. Notably, the Palantir-to-S&P 500 ratio has been trending higher throughout 2024 and shows no sign of reversing.

‍

Zooming into the daily chart, the August sell-off took shares from roughly $200 down to $145 before the stock entered a period of sideways consolidation. Since then, trading volume and volatility have dried up another technical signal that often precedes a breakout.

‍

In our Active Opps portfolio, Palantir currently holds a 5.53% weighting a meaningful allocation, though we’ve had positions as high as 11%. Several names covered in previous editions, such as Bloom Energy (BE), MP Materials (MP), and Credo Technology (CRDO), are showing fatigue, and trimming those positions could free up capital to expand our Palantir stake. A decisive break above $190 would confirm a breakout, and as long as the stock stays above $180, I plan to increase our exposure in the Active Opps account.

‍

In the slower-moving Tactical Alpha Growth (TAG) portfolio, we initiated a 2% position in mid-September while the stock was consolidating. If we start to see Palantir make a move toward $190, I’ll look to increase that position to around 5%.

‍

In short, Palantir appears to be coiling up for a move and with strong fundamentals, growing free cash flow, and improving technical strength, the stock may soon reward patient investors who are ready before the next wave of AI-driven momentum hits.

‍