PLTR holds above support on Friday after pessimistic week

Share:

• Palantir stock has shed nearly 9% so far this week.
• PLTR stock is sitting right on medium-term support from $13.50 to $14. 
• A break of $13.50 would send PLTR hurtling toward $10.25.
• A recent AIP conference gave Palantir good marks on its move into the LLM space.

Palantir (PLTR) stock advanced 1.2% to $14.17 on Friday. This is a good sign since PLTR lost 8.7% in the first four sessions this week. Tech stocks like Palantir fared poorly after the Federal Reserve on Wednesday said it was still open to further rate hikes later this year and that 2024 would probably see a slower rate-cutting timeline. 

Palantir stock dropped 2.7% on Wednesday and then another 5% on Thursday as the growth-focused NASDAQ 100 experienced its worst week thus far since early March.

Palantir stock news: All downhill since Morgan Stanley downgrade

It has nearly been a month, but looking back on the September price chart, it appears that the dream ended for Palantir traders when Morgan Stanley downgraded PLTR to underweight on August 31. Palantir stock traded down 8.3% in that session.

While bulls have tried their best to relaunch the May through July rally that pushed PLTR up to $20, September saw the secondary rally lose interest at $16. Morgan Stanley’s main point with their downgrade note, to which they attached a $9 price target, was that most of the near-term upside was already baked into the share price.

Palantir is – even now following the share price pullback of late September – valued at 61 times forward earnings. This valuation profile mixed with a lack of certainty over profitability from Palantir’s much-hyped Artificial Intelligence Platform or AIP gives Palantir a poor risk/reward profile, according to Morgan Stanely’s coverage update.

AIP is Palantir’s answer to ChatGPT. It is a large language model (LLM) that Palantir has begun offering its clients who want to integrate a self-branded chatbot for customers. Palantir management, however, has been tight-lipped about how AIP will add to the bottom line.

The rest of Wall Street does have a broadly positive read on AIP however. Palantir held a special conference for AIP last week, and the reviews from analysts were largely exemplary. 

Wedbush Securities’ Dan Ives, who has a $25 price target on PLTR stock, wrote, “Overall, we believe Palantir is on the golden path for [AIP’s] monetization story on the commercial side and is well-positioned to capitalize on the strong commercial spending tailwinds into 2H23/2024.”

Last week, Palantir announced one successful instance of its AIP rollout. The artificial intelligence (AI) company signed a deal with the UK defense firm Babcock International Group.

“The partnership will leverage Palantir AIP, the AI-enabled instance of the company’s software, that will aim to transform how the Babcock workforce captures, integrates, models and builds data-driven solutions,” Palantir said in a statement.