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Should you buy Palantir stock after partnering with Merck to tackle chip shortage?

on Dec 7, 2021
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  • Palantir shares on Tuesday surged 4.5% after announcing a partnership with Merck Group.
  • The company has joined with the Germany-based technology conglomerate to tackle chip shortages.
  • Palantir will also provide insights into materials and fabrication processes at semiconductor plants.

On Tuesday, Palantir Technologies Inc. (NYSE:PLTR) shares advanced by more than 4.5% after announcing a partnership with German technology conglomerate Merck Group. The two companies have joined hands to try to find a solution to the unending chip supply shortage in the semiconductor industry.

Palantir will use its platform to provide insights into material and fabrication processes in the semiconductor industry.

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The Anthinia platform will deploy artificial intelligence and big data analytics for enhanced predictive manufacturing for chemical mechanical polishing (CMP), a critical step in the semiconductor manufacturing process.

Merck and Palantir have been collaborating on different projects for over four years.

Palantir’s growth looks exciting

From an investment perspective, Palantir shares trade at a steep forward P/E ratio of 92.61, making the stock less attractive to bargain hunters.

However, analysts are optimistic about the company’s growth prospects, forecasting its EPS to grow by more than 35% next year and at an average annual rate of nearly 50% over the next five years.

Therefore, the stock could be an exciting option for long-term investors.

Source – TradingView

Technically, Palantir shares seem to be trading within a sharply descending channel formation in the intraday chart. However, Tuesday’s rebound prevented the stock from sinking deeper into oversold conditions, creating an exciting opportunity to buy.

Therefore, investors could target extended rebounds at about $20.99, or higher at $22.59, while $18.32 and $17.00 are crucial support zones.

In summary, although Palantir trades at steep valuations, it looks like a compelling growth stock after the recent plunge.