Palantir's fresh 52-week high: What comes next? (07/10/2024)

Hello, everyone! This week, we turn our attention to Palantir Technologies Inc. (NYSE: $Palantir(PLTR.US)$), a stock that benefits from artificial intelligence (AI) and specializes in software platforms for big data analytics. In this article, we’ll explore the latest trends and take a close look at the company’s recent market activity.

What’s new?

On July 10, 2024, Palantir’s shares closed up 3.76%, reaching a fresh 52-week high and bringing its year-to-date gain to an impressive 65%. This move coincides with other notable AI stocks experiencing sharp increases due to improving market sentiment.

Palantir is seen as a top choice for investors looking to capitalize on the AI boom on Wall Street. The company's numerous AI integrations and product launches have been well-received by its key government clients and its growing enterprise sector.

However, some market observers have expressed frustration with Palantir’s lack of business visibility, describing the data mining and AI specialist as a “giant black box.”

Palantir currently trades at over 230 times earnings and a price-to-sales (P/S) ratio of 27, which is exceptionally expensive and has raised concerns among investors. While the company has demonstrated positive earnings growth in recent quarters, it is evident that Palantir must improve its margins to justify these high valuation multiples.

Conversely, Palantir supporters believe that the company’s consistent government contract wins and AI-related growth catalysts justify these multiples.

In a recent note, Wedbush analyst Dan Ives listed Palantir as one of the stocks that can benefit from the “AI party” that is just beginning. He identified Palantir as one of the stocks that will ride the AI wave thanks to their “massive installed bases” in both the enterprise and consumer spaces.

Chart of the day

Trend analysis:

Palantir’s shares ($Palantir(PLTR.US)$) have been on an upward trend over the past 12 months, culminating in a high of $27.50 in early March. Following that, the stock consolidated for several months, dropping to as low as $20.33. Nevertheless, with the recent achievement of fresh 52-week highs, there are indications that the uptrend is likely to continue.

Technical indicators:

● The moving averages (MAs) of PLTR show a bullish alignment structure, with major shorter-term MAs above those of longer-terms. This indicates a potential bull market.

● Despite the stock hitting fresh 52-week highs, there has not been a significant surge in trading volume compared to previous swing highs. This suggests a lack of fresh buying interest in the short term.

● The 14-day relative strength index (RSI) has been fluctuating around the overbought threshold (70), signaling market hesitation.

Next move?

PLTR’s fresh 52-week highs suggest the absence of any clear resistance. As a potential AI-beneficiary stock, it’s likely that its short-term movement will align with the market sentiment towards AI.

In order to potentially identify a price pullback in the near term, traders may want to monitor technical indicators such as trading volume and RSI.

This presentation discusses technical analysis, other approaches, including fundamental analysis, may offer very different views. The examples provided are for illustrative purposes only and are not intended to be reflective of the results you can expect to achieve.

All investing involves risk, including the potential loss of principal, and there can be no guarantee that any investing strategy will be successful.