Palantir stock jumped after earnings, but a risky pattern points to a crash

Palantir stock price rebounded by over 6% in the extended hours after the software company published strong results that beat analysts' estimates. PLTR jumped to $158, up substantially from the year-to-date low of $146. So, will it continue rising as a major risky pattern forms?

Palantir published strong financial results 

Palantir, the company that Alex Karp leads, published strong financial results, which showed that demand for its solutions from the government and corporates continued rising.

The results revealed that its revenue jumped by 70% YoY, making it one of the fastest-growing companies in the United States. This growth was driven by the US division, whose growth was 93% to $1.08 billion.

The commercial segment rose by 137% in the last quarter to $507 million as more companies entered the industry. The Trump administration continues to use Palantir’s solutions, with the government revenue rising by 66% to over $570 million.

These numbers are important because they show that the company’s commercial business is about to flip the government arm. Palantir added 180 customers spending at least $1 million a year. It also added 84 and 61 customers spending at least $5 million and $10 million annually.

The company's international business is also booming as more companies and governments seek access to its tools. Its Artificial Intelligence Platforms (AIP) business is seeing more demand as companies and governments seek for ways to deploy AI models at scale.

Palantir has become a more profitable company, with its operating income jumping to $798 million from $373 million in the same period in 2024. Its operating margin has jumped to 57% from 45% in the same period in 2024.

Most importantly, the company boosted its forward guidance. It now expects that the first quarter revenue will be between $1.532 billion and $1.536 billion, while its adjusted income will be between $870 million and $874 million.

READ MORE: Palantir stock receives Wall Street love ahead of Q4 earnings

For the year, the company sees its revenue soaring to between $7.18 billion and $7.19 billion. These numbers were higher than what analysts were expecting. Most importantly, the company is often highly conservative, meaning that its real numbers will be much better than its guidance.

The company has continued making the case that it is not highly overvalued by focusing on the rule-of-40, which looks at its revenue and profitability growth. Data shows that it has one of the highest metric in the United States with a multiple of 127%.

Palantir stock price technical analysis 

The main risk that Palantir stock faces is that it has formed a highly bearish pattern known as the head and shoulders. In this case, the head is at the all-time high of $210, while the shoulders are around the $200 level  

The neckline is at $146, its lowest level in August and November last year. It also remains below the 50-day and 100-day Exponential Moving Averages and the Supertrend indicator.

Therefore, there is a likelihood that the post-earnings dip will be short-lived. A drop below the neckline at $146 will confirm the bearish outlook and point to more downside, potentially to the psychological level at $100.

The bearish Palantir stock price forecast will become invalid if it moves above the right shoulder at $200.