Palantir Technologies (PLTR) stock price has suffered a harsh reversal in the past few days as concerns about the tech sector continued. It has moved into a deep correction as it crashed by over 12% from its highest point this year. 

Palantir earnings ahead

America’s technology companies have retreated as the earnings season continues. The Nasdaq 100 index dropped by over 405 points on Wednesday and futures data show that it will open significantly lower on Friday. 

Some of the top AI-focused companies have become the worst performers. Last week, Alphabet (GOOG) shares have retreated by over 10% from the highest point in July. Amazon stock fell by over 6% after publishing its results.

Therefore, the Palantir stock price has slumped as investors anticipate weak financial results when it releases them on Monday. 

Analysts believe that Palantir will publish strong financial results, helped by its commercial side. The average view is that its results will show that revenues rose by 22.4% in the last quarter to over $652 million. In its last report, Palantir guided to between $649 million and $653 million in Q2 revenues. 

For the year, these analysts expect that its revenues will rise by 21.30% to over $2.7 billion followed by $3.26 billion in 2026. Palantir expects that its annual revenue will be between $2.67 billion and $2.68 billion. 

Palantir will likely publish better results since it has a long record of beating the consensus estimate.

These numbers show that the company’s business has been growing at a faster pace as its annual revenue has risen from over $742 million in 2019 to over $2.2 billion in 2023. 

Most importantly, Palantir has finally turned a profit. It made over $209 million in net income in 2023 after making a $373 million loss a year earlier. 

PLTR’s last financial results

The Palantir stock price sees significant moves after publishing its financial results. In May, the stock tumbled by over 12% after earnings. Before that, the stock rose by 24% and 20% in the last two quarterly results. 

Its gap-up or gap-down could be substantial after it releases the latest financial results because of its emphasis on artificial intelligence. 

In its most recent results, the company said that its net income rose to $106 million, its sixth consecutive quarter of profitability. 

Most importantly, its commercial business is thriving and analysts believe that it will overtake the government in the next few quarters. This segment’s revenue rose by 27% to $299 million while the government segment grew by 16% to $355 million. 

Palantir now serves 262 commercial customers who use its Foundry solution to integrate and analyze data from various sources. Gotham, on the other hand, is the operating system for global decision-making in the defense industry.

Apollo, on the other hand, is its software solution that lets customers deploy and secure software across multiple environments. 

Palantir hopes that all large enterprises will use its platforms to make decisions and improve its edge. By so doing, it will change the notion that it is just a pure-play government contractor like Booz Allen Hamilton.

The other important thing to watch in Palantir’s earnings is its Artificial Intelligence Platform (AIP) solution. This is an important platform that provides companies with the infrastructure they need to deploy AI and large language models. 

Palantir valuation concerns

A key concern among many investors is that PLTR is a highly overvalued company given its $60 billion valuation. Palantir proponents believe that the company has more room to grow, especially in its commercial side and because of its AIP solution. 

Other analysts cite the company’s valuation as a big concern. Besides, the company has a forward price-to-earnings ratio of 172, higher than the industry average of 29.7. Nvidia, a company that is growing faster than it has a forward multiple of less than 50.

With growth included, Palantir has a price-to-earnings-to-growth (PEG) of 3.62, higher than the industry average of 1.94. 

Therefore, the company is valued to perfection, meaning that it needs to publish strong results on Monday.

Palantir stock price forecast

PLTR chart by TradingView

Turning to the daily chart, we see that the PLTR stock price peaked at almost $30 in July and has now dropped to $26. It has also dropped below the important support level at $27.50, its highest swing on March 7th. 

On the positive side, the stock has found support above the 50-day moving average, meaning that bulls are kind of in control. Also, Palantir Technologies has formed a cup and handle pattern, a popular bullish continuation sign. 

Therefore, while it is hard to predict how a stock will trade ahead of earnings, odds are that PLTR stock will bounce back on Monday. If this happens, it will likely bounce back and retest the key resistance point at $27.50.

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