To The Moon

$Palantir Technologies Inc.(PLTR)$ ’s stock has been on fire over the past few months, now trading at all-time highs. Analysts have cashed in on half their holdings, citing valuation risks that can no longer be ignored. However, they are holding on to the other half, given the company’s long-term potential.

For new investors, the current price seems risky. Waiting for a pullback would provide a better margin of safety before adding it to a portfolio.

Soaring Performance Outpaces the Market

In just three months, Palantir’s stock has skyrocketed by 60%, far outperforming the broader market. After this stunning rally, analysts decided to lock in profits by selling half their shares.

The reasoning? The stock has blown past optimistic target prices. Another key factor was insider selling. With insiders gradually trimming their positions, analysts felt it was wise to follow suit and take some profits off the table.

Q3 Earnings Could Shape the Next Move

Palantir’s next major catalyst is the Q3 earnings report on November 4. Wall Street expects revenue growth of 26% year-over-year and EPS growth of 30%. Given the company’s recent performance, beating expectations seems likely.

The question, however, is whether Palantir’s current valuation makes sense. According to models, its fair value is around $21.59 per share, with an optimistic target of $30.57. Right now, the stock is trading above both estimates.

Realistically, the stock’s fair value probably lies somewhere between the base and optimistic scenarios. That’s why selling some shares at this stage seems reasonable—this rally can’t go on forever.

With a forward P/E ratio of 120x and a P/S ratio of 35x, it’s clear that the upside is limited for now. Analysts are waiting for the stock to drop to around $30 before issuing a buy rating again.

AI and Government Deals Drive Growth

Despite valuation concerns, Palantir’s growth story remains intact. Its commercial business is thriving as more clients embrace the generative AI wave. Meanwhile, government contracts continue to roll in, adding further momentum.

With these growth drivers in place, Palantir looks set to maintain double-digit expansion.

Palantir’s stock has been trading near record highs for over a week, establishing a technical support level around $40. If the price holds above $40 heading into the earnings report—and especially if earnings exceed expectations with upward guidance—the rally could continue.