Palantir has been eerily quiet since its sharp selloff in August. I think the technicals and fundamentals are in place for the AI giant to break through resistance and run towards $200 just before or after earnings on November 3rd. Stocks of Palantir and other hyper-growth AI builders, as well as the Nasdaq, fell quite sharply in August on concerns about rising valuations. Since then, the company has been very quiet in both volatility and volume, setting up a potential breakout. I have been trading Palantir in and out of my “fast money” managed account, Active Opps (linked below), and just recently added it to my slow-moving growth portfolio in a portfolio update and rebalance on September 15th. Unless some drastic new information comes out, I think I’ll continue to use this name for a while. Palantir operates in the data analytics industry and AI software space, and is perhaps the most cutting-edge and opportunistic company in the software space. You could call it the Nvidia of software. Palantir has a large addressable market with a combination of very sticky long-term government defense contracts, as well as expansion into corporate and commercial sectors such as healthcare, financial services, banking, manufacturing, and energy/utilities. Despite an extremely generous 2026 forward valuation of 181 times expected 2026 non-GAAP earnings ($0.85), the company is generating $1.1 billion in free cash flow this year, which is expected to grow to nearly $2 billion next year. The chart also shows that the FCF margin rate will be above 40% for the foreseeable future. Looking at the weekly chart below, we can see that top-line revenue has been consistently growing, with +48% expected next year and GAAP EPS growth of 131% in 2026. Again, it’s hard to overstate how extreme the valuation is and how perfectly priced this stock is. But at a $430 billion valuation, the market has high expectations for this company, and Alex Karp has the ability to grow this company to its potential. There was a time when NVDA was trading at a similar valuation before Jensen and his colleagues really took off. For PLTR, and many other hyper-growth AI-building companies that are not yet profitable, a combination of fundamental confidence in revenue growth and a thorough understanding of technical analysis to serve as risk-reward parameters is key. Looking at the weekly chart, we see a lower bound of technical support just below the 20-week moving average (same as the 100-day moving average, beyond the 5th day of the trading week), and we also see parallel channel support from summer 2024. This support zone is around the $160 zone. First, growth trade is paused at various macro overhangs and needs to hold here. The Palantir/S&P ratio has been rising since 2024 and shows no signs of slowing down. If you go to the daily chart, you’ll see that it plummeted from about $200 to $145 in August. After that, consolidation begins and the black dashed line begins. Volume and volatility are pretty depleted and we are ready for a breakout from the resistance. In our active ops portfolio (linked below), we hold a 5.53% allocation, which is quite large, but we also hold a position as large as 11%. There are several stocks I mentioned in this Tuesday column, including BE , MP , and CRDO , that are showing signs of depletion and I would like to reduce them to free up purchasing power and increase my Palantir allocation. A breakout above $190 would be considered a breakout and we would expect the price to rise, but since it remains above $180, we would consider increasing our exposure with active ops. The slow-moving Tactical Alpha Growth Portfolio (TAG) has held a newly added 2% position within the consolidation since September 15th. If we start to see a test of $190, I would consider raising it to about a 5% hold. -Todd Gordon, Founder, Inside Edge Capital, LLC We provide active stock alerts, portfolio management, and regular market updates like the ideas above. Disclosure: Gordon personally owns PLTR and also owns it through his asset management company, Inside Edge Capital. All opinions expressed by CNBC Pro contributors are solely their own and do not reflect the opinions of CNBC, NBC UNIVERSAL, its parent or affiliate companies, and may have been previously disseminated on television, radio, the Internet, or another medium. The above is subject to our Terms of Use and Privacy Policy. This content is provided for informational purposes only and does not constitute financial, investment, tax, or legal advice or a recommendation to purchase any securities or other financial assets. The Content is general in nature and does not reflect any individual’s unique personal circumstances. The above may not be appropriate for your particular situation. Before making any financial decisions, you should strongly consider seeking the advice of your own financial or investment advisor. Click here for full disclaimer.
