PLTR Stock: Is Palantir a Buy, Hold or Sell at Current Levels?

Palantir Technologies (NASDAQ:PLTR), recognized for big data services and government contracts, attracted attention with blockchain and AI advancements. However, despite high-profile deals, PLTR stock’s financial performance disappointed, leading some to see it as a “glorified consultant” rather than a tech innovator. Intense competition from more profitable consulting firms presents a challenge.

Despite the easing of “AI mania,” PLTR stock, near its 52-week highs, sustains confidence in the company’s AI capabilities. Despite robust recent earnings, analyst Brian White warns against over-extrapolating, citing commercial activity’s vulnerability to economic fluctuations and government deal unpredictability. Trading at 80 times forward earnings, PLTR appears detached from reasonable fundamental valuation.

Here are some recent news and updates that you need to know about Palantir.

PLTR Stock Has Been Trending Higher

Palantir shares rose 5.1% as OpenAI’s CEO, Sam Altman, left due to communication issues, leading to a loss of confidence. Altman and co-founder Greg Brockman joined Microsoft to lead an advanced AI research team, signaling Microsoft’s commitment to the AI market. This suggests AI platforms are attractive acquisition targets for tech companies. After the initial increase, shares settled at $21.51, up 4.9% from the previous close.

Palantir’s shares, known for volatility, had 48 significant moves exceeding 5% in the past year. Today’s move suggests the market finds the news meaningful without fundamentally altering its perception. The recent significant move, 18 days ago, followed an impressive earnings report. Third-quarter results surpassed revenue and EPS estimates, with improved gross margin and positive free cash flow. 

The company raised full-year guidance, exceeding Wall Street’s expectations, and is now eligible for inclusion in the S&P 500, potentially increasing demand for the stock. In summary, a decent quarter showcasing the company’s stability.

Palantir and MetaConstellation

While Christmas is just a few weeks away, Palantir fueled AI-assisted decision-making worldwide, spanning war zones, factories, and outer space. The Denver-based company extended its influence across diverse sectors, including defense, intelligence, energy, autos, data protection, health care, retail, and semiconductors. Commercial and government clients included notable names such as Airbus, Ferrari, and the United Kingdom’s NHS.

Palantir’s MetaConstellation leverages satellite networks for decision-making on Earth, integrating with various sensors and AI models globally. Despite its 2020 IPO volatility, Palantir’s stock, PLTR, recently broke out with a second-stage cup pattern and surpassed a 20.24 buy point. After a brief touch on Wednesday, it gained over 3% on Friday and continued to rise on Monday, entering a new buy zone with strong volume.

Peter Thiel Sells $48M Worth of PLTR Stock

Palantir Technologies revealed that Peter Thiel’s venture fund, Mithril, sold PLTR stock worth $48 million. Thiel, a Palantir co-founder, also co-founded Mithril and was an early investor in Meta Platforms (NASDAQ:META). Despite this, PLTR’s stock saw a remarkable 208% rise this year. The stock sale coincided with Palantir’s positive year-to-date performance, driven by investor confidence in its AI capabilities and the launch of its AI platform.

Against this backdrop, analysts’ recommendations for Palantir stock remained cautious. PLTR had a Hold consensus comprising four Buy, five Hold, and five Sell recommendations. The average price target of $15 suggested a 24.13% downside from current levels.

Is PLTR a Buy?

Palantir’s US commercial sector achieved significant growth, with the company’s customer count rising 33% year-over-year and 12% quarter-over-quarter. Over three years, this metric has grown 10x, emphasizing the company’s robust acquisition and retention strategies. The “Artificial Intelligence Platform” gained rapid adoption by nearly 300 organizations since its launch, showcasing market potential. The company’s swift customer base growth underscores its market traction and delivered value. This basis alone could warrant a buy recommendation for PLTR stock.

That said, I remain cautious of this high-potential company because we haven’t seen an elongated track record when it comes to AI’s impact on companies’ bottom lines. If this trend fizzles out, plenty of downsides could materialize, leaving investors putting money in today holding the bag.

Thus, I would rate PLTR stock hold for now and suggest that investors interested in this company add it to their watch lists and monitor for big price movements. After all, an investor’s entry point will determine their rate of return for the long term. At these levels, I’m not certain that investors will achieve their hurdle rate of return despite the company’s seemingly strong near-term prospects.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.