Last week, Palantir Technologies (PLTR) saw its stock price take a hit, dropping nearly 10%. This marked the company’s longest winning stretch in over a year. While this decline was tough on investors, it granted short sellers billions in paper gains. Still, Palantir’s stock is up around 109% since the beginning of the year, leaving Wall Street divided on whether this recent dip is just a brief pause or signaling a longer-term downturn.
The Bulls point to strong growth and AI momentum
Despite the recent dip, bullish investors continue to back Palantir. The company’s stock remains attractive, fueled by increasing demand for AI-driven data analytics services. In their second-quarter revenue call, Palantir reported a remarkable 48% year-on-year growth, crossing the $1 billion mark in quarterly sales for the first time.
Analysts note that Palantir’s growth springs from two powerful sources. First, there’s the ongoing government defense contract, providing steady revenue. Second, the expansion of commercial AI platforms is creating a surge in demand. For instance, a healthcare firm recently signed an $88 million contract just months after adopting Palantir’s AI platform, showcasing rapid acceptance of the technology.
These strengths might support the company’s high valuation, even amidst short-term market fluctuations.
Bears caution against potential risks
However, not all views are rosy. Some bearish investors argue that the stock seems significantly overvalued. Notably, Andrew Left from Citron Research has labeled Palantir as one of the priciest software firms in the market.
Short sellers have played a part, raking in over $1.6 billion as stock prices fell. They contend that many recent market movements are driven more by speculation than by fundamental value.
Bears warn that the stock could face further declines if enthusiasm for AI fades or if Palantir’s contracts start to slow down.
Is PLTR the right stock to buy now?
As per Tipranks Consensus, PLTR currently holds a “hold” rating based on five buy recommendations, 13 holds, and two sells over the past three months. The average target price for Palantir’s stock sits at $156.78, indicating a potential downside of about 1.23% from current pricing.
