It’s getting tougher to know what to do with shares of Palantir (NASDAQ:PLTR | PLTR Price Prediction) as they continue trading choppily in both directions, with a potential revisitation of six-month lows in sight. While the AI software firm has had no issues monetizing its incredible technology, the big question is whether the hefty valuation (215 times trailing price-to-earnings (P/E) multiple) warrants the accelerating growth and what could happen to Palantir’s moat if we are on the cusp of an AI monetization cycle that sees other AI-first software companies getting in on the action.
Undoubtedly, Anthropic’s Claude Mythos represents a powerful shift into the frontier of applied AI. The massive benefits (and dangers) to the field of cybersecurity were made that much more apparent in the past few weeks. And with several more influential figures opining on the former high-flying market darling, investors have an increasingly tough decision to make on a name that’s encountering serious downward pressure.
It’s not easy to buy Palantir stock amid its latest multi-month descent
As with any stock that’s in pullback mode, it’s hard to try to be a hero by getting in on the dip. When negative momentum is picking up, that “instant regret” can set in fast for investors who may have been a bit too aggressive trying to time a bottom or a bounce.
When it comes to a name like Palantir, odds are you’re not going to catch the bottom, but you’ll have to confront serious volatility and maybe even the possibility of a quick double-digit percentage loss right off the bat.
The big question is how investors will respond to such negative action. Would you relish the chance to buy more of the same stock at a lower price? Or would you second-guess your bet and look for an exit on the next bounce or leg lower? As a trade, Palantir stock will be tough to get.
Does a Presidential shout-out and some buying from Cathie Wood make Palantir easier to buy on weakness?
However, for a longer-term investment, I do think that patience is key to riding out one of the nastiest periods for the shares in quite a while. Would some positive words from President Donald Trump give one enough confidence to brave the dip? Thus far, Trump’s remarks haven’t helped ease the drop in the shares. While the company’s “great warfighting capabilities” are certainly next-level, I’m sure that it’s going to take a lot more to nudge the name back into bull mode.
Perhaps some buying activity from disruptive innovation investor Cathie Wood, who runs the show over at Ark Invest, might be what Palantir stock needs? With Wood getting back into the name on the dip, the case for buying at a 35% or so discount from highs certainly feels quite a bit stronger, especially since Wood previously trimmed Ark’s Palantir stake with excellent timing.
Maybe Dr. Michael Burry’s bearish bets and concerning commentary on his Substack are enough to steer clear of the AI analytics play until the negative momentum subsides? Even if shares are 35% off, the stock is hardly cheap-looking here. And given insider selling activity, it just feels a bit dangerous to go against the momentum right here.
I’d rather buy Palantir stock on the way up than the way down
Personally, I’d much rather buy on strength than weakness with a name like Palantir. Of course, there’s no doubting the power of the AI Platform and its applause-worthy monetization, but the big unknown, at least in my books, is what happens if Anthropic, OpenAI, or any other AI innovator at the frontier decides to compete with the likes of Palantir?
Until Burry closes his bearish bet and Palantir finds a way to excite investors again, I’m going to have to take a raincheck. Sometimes, buying the dip is too hard, and when it comes to Palantir, I just don’t know where the floor could lie. While the current slate of analyst price targets suggests significant upside for buyers in the $135 level, I’m just not sure what the rise of Anthropic and other rivals could mean for commercial growth moving forward. So, in short, I’m in no rush to go long here.
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