Palantir stock stuck in correction as alarming pattern forms

Palantir stock price has crashed into a technical bear market after retreating by nearly 40% from its highest level in 2025.

PLTR dropped to $130, its lowest level since July last year, a move that has erased billions of dollars in value.

This article explores some of the top reasons why the PLTR stock may continue falling in the near term.

Palantir stock price technical analysis points to more downside 

The daily timeframe chart shows that the PLTR share price has crashed in the past few months, moving from a high of $208 in November last year to the current $130.

It recently formed a death cross pattern as the 50-day and 200-day Weighted Moving Averages (WMA) crossed each other.

This is one of the most common bearish continuation signs in technical analysis.

The stock has just moved below the 50% Fibonacci Retracement level at $137.

It also dropped below the key support level at $147, the lower side of the head-and-shoulders chart pattern.

This pattern’s head is at $208, while the left and right shoulders are at around $190.

The Percentage Price Oscillator (PPO) has continued falling, reaching its lowest level in over a year.

At the same time, the Average Directional Index (ADX) has jumped to 31, its highest level since August last year, a sign that the downtrend is gaining momentum.

Therefore, the most likely Palantir stock price forecast is bearish, with the next key target being at the psychological level at $100, which is about 20% below the current level.

Why the PLTR stock price is crashing 

Palantir share price has dropped sharply in the past few months, mirroring the performance of other top software companies like Microsoft, Adobe, and ServiceNow.

This sell-off has accelerated after the recent launch of AI tools by companies like Anthropic raised concerns about the future of the software industry.

Palantir is, at its core, a software company that offers products like Gotham and Apollo, which are geared towards companies and the military.

It also offers the Artificial Intelligence Platform (AIP), which offers companies a tool to build large language models.

We believe that the ongoing sell-off of top software companies because of the fear of disruption is not warranted, as companies will still continue buying software packages from top companies like Palantir.

One major reason why the PLTR stock has plunged is the fact that it is one of the most overvalued companies in the United States.

While its stock has plunged, its forward price-to-earnings ratio remains at 115 on a GaaP basis and 100 on a non-GAAP basis.

Its forward price-to-earnings-to-growth (PEG) ratio remains at 2.23, much higher than the sector median of 1.48

Additionally, Wall Street analysts believe that Palantir’s revenue growth will accelerate this year and then start slowing in the coming years.

The average estimate among investors is that its revenue will jump by 75% to $7.25 billion, followed by 38% to $10.25 billion next year.

Palantir’s earnings will likely be better than estimates, as it has always done in the past.

Palantir stock has also remained under pressure because of profit-taking after it soared sharply in the past few years, moving from a low of $5.65 in 2023 to a record high of $207 last year.

It is common for a financial asset to drop after experiencing a strong surge as investors book profits.