Veteran analyst revamps Palantir stock after slump | Official Website of Louis Velazquez, entrepreneur, finance guy and tech innovator

Over the past five trading days, Palantir stock has fallen 15%, sparking hesitation among investors looking for a bottom.

Earlier this month, the artificial intelligence software provider posted a strong earnings report that pushed its shares to record highs.

Palantir (PLTR) provides data analytics software to the U.S. government, military, and commercial clients. The stock soared 340% in 2024 and 108% this year as demand for AI infrastructure surged across sectors.

On August 4, Palantir posted a record second-quarter revenue of $1 billion, up 48% year-over-year. Its adjusted earnings of 16 cents also topped forecasts of 14 cents.

The company also raised its full-year guidance to between $4.142 billion and $4.150 billion, up from a prior range of $3.89 billion to $3.90 billion.

Yet its stock now struggles to hold its post-earnings gains.

Palantir stock is up more than 100% this year.

Image source&colon; Bloomberg/Getty Images

Why did Palantir stock tumble?

Palantir’s dip on Aug. 19 came together with a broader market pullback. Still, the stock has its own problems.

Despite strong earnings and outlook, Palantir’s sky-high valuation has raised eyebrows. The stock currently trades at a forward price-to-earnings ratio of 250, much higher than peers like Salesforce (CRM) (21.7) and Microsoft (MSFT) (32.9).

Palantir’s earnings quality has also been questioned. “Valuation is absurd,” The Motley Fool’s analyst Sean Williams wrote in July. He pointed out that 40% of the company’s pretax income last year came from interest on its cash.

Analysts are aware of the trading premium. Short seller Andrew Left of Citron Research recently said Palantir has become “detached from fundamentals” and sees its fair value at $40.

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Still, some analysts remain confident in the upside. Earlier this month, Piper Sandler raised its price target on Palantir to $182 with an overweight rating, citing strong demand across government and U.S. commercial segments. While acknowledging the stock’s high valuation and risk, the firm said Palantir’s growth and margin model warrants a premium.

Some major investors are cashing out. Billionaire Stanley Druckenmiller sold all his Palantir shares in the first quarter of 2025, and Cathie Wood sold about 153,338 shares worth roughly $28 million in August.

Veteran analyst plans to buy more Palantir stock

Stephen Guilfoyle, a 30-year Wall Street veteran who now runs Sarge986 LLC, a family trading operation, attributed Palantir’s recent decline to profit-taking by short-term traders. He noted that the “swing crowd” likely locked in gains as the stock tested a key moving average, accelerating the sell-off.

Guilfoyle already took profits last week, selling some Palantir shares at around $185.60. He just said he plans to re-buy if the stock pulls back to a key technical support, according to a note published on TheStreet Pro.

His plan is to re-buy up to the same amount he just sold, but only as the price moves lower, between current levels and $152.30.

“I expect the stock to test its 50-day SMA (currently $152.30) from above. I will be a buyer from here on down to that level if the stock plays my game,” Guilfoyle said.

“Even if the sell-off goes beyond here, I expect institutional investors to try to defend the name,” he added.

Guilfoyle frames this as a “capital extraction” strategy, locking in gains at the high, then redeploying that capital at lower levels.

He reiterated a price target for Palantir of $205. The stock closed at $157.75 on Aug. 19.