Can Palantir’s Rally Continue?

Key Points

• Palantir stock has gained a whopping 52% this month as the surge in the stock price shows little sign of relenting just yet.
• Palantir boasted an impressive quarterly performance, creating excitement for investors in this high-risk, high-potential-reward stock.
• The recent deal with Microsoft should not be taken lightly. It will stand Palantir in good stead for the near future. 
• Everyone wants a piece of Artificial Intelligence, but mega-cap companies are expensive. Is Palantir the best option?
• Palantir is targeting its recent all-time high, and there is little resistance to this price level.

Market Overview

It feels like a long time ago when there was concern over the tech sector as there was a broader market sell-off. At that time, just a few weeks ago, Palantir stock traded just below the $21 level. Fast forward just a few weeks and the stock trades at $32.50 as of August 22. 

Palantir stock (NYSE: PLTR) has gained a remarkable 52% already this month, thanks to a multitude of factors. It is no secret that easing recession fears has helped the rise, as the broader market has nearly clawed back everything it lost in the sell-off. However, Palantir’s specifics make this stock very attractive even at the current levels, especially since Planatir is known as an AI company. 

Another Solid Quarterly Performance

There was some concern over the quarterly performances of some of the megacap companies, but there was no doubt in Palantirs. Its total revenue was up 27% year-over-year, mainly due to its U.S. commercial revenue rising by 55%. There were also numerous other impressive statistics, such as closing 98% more commercial deals than this time last year and reaching a new milestone of 37% as operating leverage. On top of this, the forward guidance was good, too, as it suggested the current momentum in the company will continue, leaving shareholders delighted.

Looking ahead, as long as Palantir continues to show solid quarterly performances, there is no reason why Palantir stock can not continue to boast impressive gains on earnings days, so keep an eye out for its next release on October 31st.

A Deal Struck With An Industry Giant

It has been a month of partnerships for Palantir, after it announced a partnership with Wendy’s Quality Supply Chain Co-op. This deal will help Palantir accelerate its digital transformation and AI adoption.

More importantly, it also struck a deal with one of the big guns, Microsoft. It has been reported that this will allow both companies to integrate their impressive technology suite to benefit the U.S. Defense and Intelligence Community. This puts Palantir in with some amazing company and ensures they remain in good standing in the near future.

Is Palantir The Best Non-Megacap Tech Company?

The AI buying frenzy has been the talk of the town in the last year, and no one has felt the benefit more than the big names in the industry. This includes the likes of NVIDIA, Microsoft, and Alphabet. However, smaller-cap AI-based companies have been making great inroads, too, and just because they do not make the headlines does not make them great potential investment opportunities.

Companies have been flocking to Palantir to get involved with the AI buzz due to its impressive track record in the space. As reported by The Motley Fool, more than 1,025 companies completed the Palantir AIP Bootcamp. “Palantir can then upsell its AI services to existing clients, convert the 1,025 organizations that have completed the AIP Bootcamp, and recruit new customers for future bootcamps.” This means they have something that is scalable, making it very attractive to investors in the long run.

Palantir Is Gunning For All-Time Highs

Palantirs’ stock price may not be trading near the heights of NVIDIA, for example, but after opening the year at just $15 per share, it has over doubled since then. It still remains a fair distance from the all-time highs at $45, printed in January 2021, but the bulls may just be targeting this area next.

After the broad tech sell-off, Palantir stock traded into a weekly order block at $21. Since then, the reaction has been decisive, and it printed a new market structure high last week. Traders may want to utilize a re-test of this high and potentially target the next resistance area at $45. 

Bottom Line – Can Palantir’s Rally Continue?

Investors might wonder whether it is too late to buy Palantir right now. After all, the stock gained nearly 90% since the beginning of the year and over 130% YoY. Palantir’s PE ratio also stands at 191, making the stock fairly expensive.

At the same time, when considering its fundamentals and the hype around AI companies, there’s a good chance that Palantir’s bullish momentum may continue in the following months. As long as Palantir continues to report solid earnings and sign on new partnerships, there’s no reason to see a turn in momentum. Palantir has an excellent mix of sources of income that includes government and defense contracts along with AI technology. This makes Palantir one of the most attractive stocks in the market right now, even at its overvalued price.