Palantir rallies in anticipation of blowout Q2 earnings
- Palantir stock rises 3.5% ahead of Monday's Q2 release.
- Wall Street expects revenue of $939.5 million.
- US equities recover after last week's sell-off.
- Palantir's extreme valuation will be in focus after the bell.
Palantir (PLTR) stock has risen some 3.5% on Monday as the market anticipates second-quarter earnings to release a further explosion of bullish fervor. The artificial intelligence (AI) company will release results for the quarter ending in June after the close on Monday, August 4.
The wider market is also surging on Monday following Friday's sell-off that was induced by a major reduction in summer hiring estimates. Most are hoping for robust earnings news this week to protect high valuations from losing their lustre to poor economic news.
US Factory Orders, reported on Monday morning, fell 4.8% in June MoM, but that was actually better than the projected -4.9 consensus. President Trump stoked worries by threatening to raise his current 25% tariff on India due to the latter purchasing Russian Crude, but the European Union (EU) relaxed worries as it chose to hold off on any retaliation to US tariffs for six months.
Noted bear Mike Wilson, a strategist at Morgan Stanley, also relieved economic fears as he advised clients to buy the dip in US equities as earnings projections remain robust for the year ahead.
Palantir stock news
Wall Street has given Palantir an easy lay-up on earnings, only estimating it will earn $0.14 in adjusted earnings per share (EPS). This is largely in-line with Q1 and Q4 2024, so it shouldn't be difficult for the Peter Thiel-backed company to manage.
Revenue is the real focus, and Wall Street consensus puts it at $939.5 million. This would be 6% above Q1 and up 38.5% over the prior year's second quarter.
Government contracts for Palantir have been positive under the Trump administration, and the US Army announced a $10 billion contract with Palantir that transitions many smaller, disparate contracts into this comprehensive agreement. The contract runs through July 31, 2035.
Palantir stock forecast
Trading at $160 at the time of writing, PLTR shares are just shy of their all-time highs. While PLTR is definitely growing its sales figures at an impressive pace, the obvious downside for buying Palantir stock at this level is the exorbitant price tag.
Palantir stock has already risen 111% year-to-date and 514% over the past year. It trades at 265 times forward earnings and about 91 times forward revenue. It may be benefiting off the spike in global AI investment, but the already spectacular growth rate needs to be much higher to allow for such a multiple.
If you look ahead, analyst expectations are for Palantir to continue growing EPS and revenue at about a 30% clip. Something will have to budge sooner or later. Either annual revenue growth spikes north of 50% or, more likely, the multiples crash toward breathable levels.
PLTR daily stock chart
As it stands, the daily chart above shows that Palantir stock has been finding support at its 20-day (yellow) Exponential Moving Average (EMA). The 100-day EMA is also important as it sits near the $125 level that worked as resistance back in February.
Whatever happens at earnings, PLTR will move dynamically. This stock barely knows the word "sideways". A major beat could send shares to $180, but a poor showing could have shareholders selling at $125 on Tuesday.
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Author
Clay Webster
FXStreet
Clay Webster grew up in the US outside Buffalo, New York and Lancaster, Pennsylvania. He began investing after college following the 2008 financial crisis.
