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Palantir stock price forecast: rally is based on wrong assumption

on Jun 7, 2023
  • Palantir share price has jumped by over 168% from the lowest point this year.
  • It has soared in line with other artificial intelligence companies like Nvidia and
  • The stock has some more upside but a retreat to $11.55 cannot be ruled out.

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Palantir (NYSE: PLTR) stock price has been in a strong bullish trend in the past few months as the hype surrounding artificial intelligence continues. The shares surged to a high of $15.50, the highest point since January 2022. The shares have jumped by more than 168% from the lowest level this year.

Palantir is up for the wrong reason

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Palantir stock price has jumped sharply, for what I believe is the wrong reason. Like Nvidia, which I wrote about here, the shares have soared because of its AI credentials. This hype has been helped by the company’s CEO’s recent media appearances, as shown below. The management mentioned AI several times in its recent earnings statement.

The reality, however, is that Palantir is not an AI company. I believe that it is able to do that since most analysts and investors don’t know about Palantir’s technology. The company’s primary solutions are Gotham, Apollo, and Foundry. Palantir’s primary AI product is AIP, which aims to incorporate some AI functionalities in its existing products. The company said this about AIP:

“We are moving fast to ensure existing customers can quickly deploy AIP beside Gotham and Foundry to transform their operations with intelligent, contextual decision-making and sophisticated automation and coordination from the battlefield to the boardroom.”

The fact that Palantir is not really an AI company and it is unclear whether it will be able to make money with AIP. Further, the company provides its services mostly to the military and several other large companies. In 2022, 56% of its revenue came from the military while the rest came from several large companies.

Historically, these entities tend to be relatively slow to change. I don’t think the US military will embrace AI in the near term.

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Most importantly, Palantir is not a startup. Instead, this is a highly unprofitable company that was established in 2000. In the past five years, the company has lost over $2 billion. On the positive side, the company is expected to turn a profit this year but its margins will be relatively thin. Also, its revenue growth has been relatively low. In Q1, its revenue jumped by 18% mostly because of its SPAC-related activities.

Palantir stock price forecast

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palantir stock

Palantir chart by TradingView

So, is it safe to buy Palantir stock? PLTR share price has been in a strong bullish trend in the past few months, making it one of the best-performing companies. The stock has moved above the key resistance point at $11.55, the highest point on August 5th. It has jumped above the important point at $10.34, the highest point at February 16th.

The MACD and the Awesome Oscillator have moved above the neutral point. Therefore, it seems like the stock has momentum and could continue rising in the near term as buyers target the key level at $20.62 (July 16 low). In the long term, however, the stock will likely pull back and retest the key price at $11.55.


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