New Palantir Price Target as AI Sector Loses Momentum

December 1. Word on the street is that readers want to know what I am thinking in regard to Palantir Technologies (PLTR) . 

Readers may also recall that Palantir was my stock of the year for a second straight year. "Stock of the year" for the incoming year is something we do here at TheStreet Pro late in every December. I have had winners. I have had losers. I had never had a winner like I did with PLTR in 2024. 

The stock was up 340% that year. Even after PLTR's recent struggles (-39.9% from the early November high), the stock is still up close to 122% for 2025. It's been grand. The stock is up 2,482% since we initiated it for the "Stocks Under $10" portfolio a few years ago. Enough patting on the back, Sarge. What about now?

What About Now?

Palantir reported the firm's third quarter financial results on Monday afternoon, November 3. The firm posted an adjusted EPS of $0.17 (GAAP EPS: $0.18) on revenue of $1.181 billion, easily beating expectations for those top-line and bottom-line results. The sales print was good for year-over-year growth of 62.6%.

It gets better. That was a ninth consecutive quarter of accelerating year-over-year revenue generation from the prior quarter. The firm closed 204 deals of at least $1 million, 91 deals of at least $5 million and 53 deals of at least $10 million for the period as the customer count grew 45% year over year and 7% sequentially. Domestically driven sales grew 77% to $883 million. Within the U.S., commercial sales increased 121% to $397 million, while U.S. government sales increased 52% to $486 million. Very hard to top numbers like that.

The current quarter looked bright less than a month ago. For the fourth quarter, Palantir guided revenue towards a range spanning from $1.327 billion to $1.331 billion, coming to $1.329 billion at the midpoint. That would be good for year-over-year growth of 61%, which obliterated the $1.18 billion that Wall Street was looking for at the time.

For the full year, the firm projected revenue generation of $4.396 billion to $4.4 billion, or $4.398 billion at the midpoint. That would be good for annual growth of 53% and again roasted what had been the consensus view for $4.16 billion. Adjusted operating full year free cash flow was seen at $1.9 billion to $2.1 billion, which was up from prior guidance of $1.8 billion to $2 billion. To be blunt, the firm is executing at an almost unprecedented level of excellence.

Keep This in Mind...

For that third quarter, Palantir generated operating cash flow of $507.664 million and free cash flow of $539.862 million (that's right, free cash outpacing operating cash). The balance sheet? Glad you asked. Palantir ended the period with a cash position of $6.438 billion and current assets of $7.586 billion. Current liabilities added up to $1.18 billion, which does include deferred revenue and customer deposits of $684.892 million. 

At the headline, the firm's current ratio stands at 6.43. Good enough? Remember, for many S&P 500 member firms, just keeping that ratio above 1.0 is considered an accomplishment. Adjusting for deferred revenues and deposits, Palantir's current ratio stood at an incredible 15.3.

Total assets amounted to $8.114 billion, which includes nothing intangible. We say "rock on" when companies don't lean on intangible assets to beef up their assets. Total liabilities less equity came to $1.426 billion, which included another $45.472 in deferred revenues/deposits. The firm had absolutely no debt on the books. Let me repeat that: The firm had absolutely no debt on the books.

I have said it and written it before. It's worth harping on and driving home: This may very well be the cleanest, strongest, most professionally managed balance sheet that I have ever seen for a firm this size in my career.

Profit Taking?

Then came trouble. I wrote to readers on November 10, which happened to be the 250th birthday of the United State Marine Corps this year, to alert readers that I was adding to my long position on weakness. The stock was trading with a $177 handle at the time. Keep in mind that discipline demands that we take at least token profits at target prices, so we had adjusted position size many times since it was trading at $6.49 and our target price was an even $10.

This was more serious than mere profit-taking, though. The entire marketplace went into a rotation that saw November take a bite out of the AI-trade and elite level tech stocks broadly. The stock gave up its 50-day SMA, which forced some portfolio managers to reduce exposure. The stock hit resistance close to its 21-day EMA after losing that level, indicating that the swing crowd had turned against Palantir. At least this stock has not come close to its 200-day SMA. Losing that line would allow a destabilized situation to potentially get ugly.

Let's Think

Readers will see that what I had seen as an ascending triangle of bullish continuation (and left visible in light green) ​did in fact produce an upside pop that ultimately failed. That upside pop turned my ascending triangle into a rising wedge of bearish reversal, which for those who recognized it promptly (I did not), worked like a charm.

Relative strength is weak, but not putrid. The stock's daily MACD is set up bearishly with the histogram of the nine-day EMA in negative territory and the 12-day EMA below the 26-day EMA with both of those lines also in negative territory. That said, the nine-day EMA is closing in on the zero-bound as the 12-day EMA is closing in on the 26-day EMA. We're not there yet, but those would be bullish developments.

I had reiterated my $226 target price after earnings, which was no longer the Wall Street high at that point. I am going to have to pull in some of my levels at this time:

Target Price: $215 (down from $226)

Pivot: 50-day SMA (currently $179) 

Add: Close to the 200-day SMA (currently $141)

Panic: Loss of the 200-day SMA

At the time of publication, Guilfoyle was long PLTR equity.