Palantir Technologies Stock Slumps Amid Software Rout: What's Driving The Action?

Palantir Technologies Inc (NASDAQ:PLTR) shares are down on Friday as the stock faces pressure from a broader selloff in the software sector. Friday’s decline comes as software stocks are experiencing their worst month since the Lehman Brothers collapse, with investors reassessing traditional business models amid the rapid advance of artificial intelligence, which has raised concerns about the sustainability of current valuations.

Here’s what investors need to know.

• Palantir Technologies stock is trending lower. Why are PLTR shares declining?

Broader Software Selloff Pressures AI Leaders

The iShares Expanded Tech-Software Sector ETF is on pace for its steepest monthly drop since October 2008, as investors question whether traditional software models can withstand rapid advances in artificial intelligence.

High-flying names including Palantir, Oracle and AppLovin are down sharply for the month amid concerns over slowing cloud growth and the durability of AI monetization.

Innodata Deal Highlights AI Push, But Sentiment Rules

Fundamentally, Palantir continues to push deeper into AI. The company recently selected Innodata to supply curated training datasets and data engineering for Palantir's AI platforms, including rodeo-event video analytics that track animals, riders and performance metrics in real time.

Even as Innodata shares jumped on the news, Palantir's stock remains under pressure, suggesting macro sector fears are overshadowing company-specific AI wins for now.

Why Palantir’s Stock Signals Caution Now

Palantir stock is currently trading 13% below its 20-day simple moving average (SMA) and 16.1% below its 100-day SMA, indicating a bearish trend in the short to medium term. Shares have increased approximately 83.62% over the past 12 months, and they are currently positioned closer to their 52-week lows than highs, suggesting a significant pullback from recent peaks.

The RSI is at 27.33, indicating that the stock is in oversold territory, while the MACD is below its signal line, reflecting bearish pressure on the stock. The combination of oversold RSI and bearish MACD suggests mixed momentum, indicating potential caution for traders.

• Key Resistance: $155.50
• Key Support: $148.00

PLTR’s Business Model

Palantir is an analytical software company that focuses on leveraging data to create efficiencies in its clients’ organizations. The firm serves commercial and government clients via its Foundry and Gotham platforms, respectively.

The company matters significantly in the current context as it navigates the challenges posed by AI advancements, which are reshaping the software landscape.

Earnings Surge: A Game-Changer Ahead?

Investors are looking ahead to the next earnings report on Feb. 2.

• EPS Estimate: 21 cents (Up from 14 cents YoY)
• Revenue Estimate: $1.34 billion (Up from $827.52 million YoY)
• Valuation: P/E of 352.6x (Indicates premium valuation)

Analyst Consensus & Recent Actions: The stock carries a Hold Rating with an average price target of $195.28. Recent analyst moves include:

• Phillip Securities: Initiated with Buy (Target $208.00) (Jan. 22)
• Citigroup: Upgraded to Buy (Raises Target to $235.00) (Jan. 12)
• Truist Securities: Initiated with Buy (Target $223.00) (Jan. 6)

Valuation Insight: While the stock trades at a premium P/E multiple, the consensus and 50% expected earnings growth suggest analysts view this growth as justification for the 32% upside to analyst targets.

Benzinga Edge Rankings

Below is the Benzinga Edge scorecard for Palantir Technologies, highlighting its strengths and weaknesses compared to the broader market:

• Value: Weak (Score: 1.18) — Trading at a steep premium relative to peers.
• Growth: Strong (Score: 92.05) — Indicating robust growth potential.
• Momentum: Strong (Score: 86.51) — Stock is outperforming the broader market.

The Verdict: Palantir Technologies’s Benzinga Edge signal reveals a classic ‘High-Flyer’ setup. While the strong Growth (92.05) and Momentum (86.51) scores indicate potential, the weak Value (1.18) score warns that the stock is priced for perfection—investors should remain cautious.

Top ETF Exposure

• Global X Defense Tech ETF (NYSE:SHLD): 7.82% Weight
• iShares Expanded Tech-Software Sector ETF (BATS:IGV): 8.17% Weight
• NestYield Dynamic Income ETF (NYSE:EGGY): 7.66% Weight

Significance: Because PLTR carries such a heavy weight in these funds, any significant inflows or outflows for these ETFs will likely force automatic buying or selling of the stock.

PLTR Shares Edge Lower Friday

PLTR Price Action: Palantir Technologies shares were down 2.83% at $147.57 at the time of publication on Friday, according to Benzinga Pro data.

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