To The Moon

We have seen $Palantir Technologies Inc.(PLTR)$ showing decline recently, should that be a caution for investors especially with its high valuation concerns and also fear of the potential AI bubble still lingering?

Analyzing Palantir Technologies (PLTR) as we head into 2026 requires balancing its undeniable operational success against a valuation that many Wall Street veterans find "eye-watering."

The stock’s recent decline is a textbook example of valuation discipline—where even record-breaking growth isn't enough to satisfy a market that has priced in perfection.

In this article, we would like to look at the breakdown of why caution is currently the watchword, what to look for in the upcoming Q4 2025 earnings (scheduled for February 2, 2026), and potential short-term plays.

The Case for Caution: Valuation vs. Reality

The recent pullback in PLTR (down about 17% from its late 2025 highs) is less about a failure in the business and more about a reversion to the mean.

• Extreme Multiples: As of late January 2026, Palantir trades at roughly 100x sales and a forward P/E ratio exceeding 170x. For context, most high-growth software peers trade between 10x and 20x sales.

• The "AI Bubble" Narrative: Skeptics, including high-profile bears like Michael Burry, argue that AI capital expenditure is reaching a saturation point. If enterprise customers stop "experimenting" with AI and start demanding immediate, massive ROI, any slowdown in Palantir’s contract wins could trigger a sharp 50%–60% drawdown.

• Growth Deceleration Risk: While Palantir grew revenue by ~63% in Q3 2025, analysts expect this to "cool" to around 40–43% in 2026. In a high-valuation environment, a decelerating growth rate—even if still objectively high—is often punished.

Q4 2025 Earnings: Key Metrics to Watch

Palantir is expected to report revenue of approximately $1.33 billion and Adjusted EPS of $0.23. Beyond the headline numbers, focus on these three "make-or-break" metrics:

Short-Term Trading Opportunities

Post-earnings volatility is almost guaranteed for PLTR. Here is how traders are positioning:

• The "Support Hold" Play: The stock has recently consolidated around the $165–$169 level. If earnings beat and the stock holds this support, a "relief rally" back toward $185–$190 is a viable short-term swing trade.

• The "Breakdown" Play: If the company meets expectations but fails to raise 2026 guidance, expect a "sell the news" event. A break below $160 could quickly see the stock test its next major support near $142.

• Options Sentiment: Implied volatility (IV) is high. Some traders are using Vertical Spreads (e.g., Bull Call Spreads) to cap their risk while betting on a positive reaction, rather than buying expensive "naked" calls.

Bottom Line: Palantir is a "execution-perfect" company trading at a "delusional" price. It is a classic Short-Term Sell / Long-Term Buy. For long-term believers, these "valuation corrections" are the only realistic entry points.

As we approach the February 2, 2026, earnings report, the technical picture for Palantir (PLTR) is flashing a high-stakes "divergence." While the stock is technically "oversold," it is also battling a bearish trend formation that could lead to a significant breakdown if earnings don't provide a massive spark.

In the next section we will be looking at the technical breakdown of the RSI, MACD, and chart patterns to help you time a potential entry.

RSI (Relative Strength Index): Oversold Signal

The 14-day RSI for PLTR is currently hovering around 35, with some scanners even showing it as low as 17.7 on a shorter timeframe.

• Analysis: In technical terms, an RSI below 30 is "Oversold." Historically, when PLTR hits these levels, it often sees a "dead cat bounce" or a short-term relief rally as sellers exhaust themselves.

• The Caution: An oversold RSI in a high-valuation stock can stay low for a long time if the fundamental narrative is shifting (the "AI Bubble" fear). It suggests the stock is cheap relative to recent prices, not necessarily cheap relative to its value.

MACD (Moving Average Convergence Divergence)

The MACD is currently bearish. The MACD line is below the signal line and trending downward toward the zero axis.

• Analysis: This indicates that downward momentum is still accelerating. Until you see the MACD line "curl" back up or the histogram bars start shortening (losing their deep red color), the trend remains firmly in the hands of the bears.

• Actionable Trigger: A "bullish crossover" (the blue MACD line crossing above the orange signal line) shortly after earnings would be a strong signal that the correction has bottomed out.

Key Chart Patterns: The "Head and Shoulders" Risk

The most critical pattern to watch right now is a potential Head and Shoulders formation that has been developing since the stock hit its all-time high of $207.52 in November 2025.

The Neckline: The "line in the sand" for bulls is $160.00 – $165.00.

Support & Resistance Levels:

• Immediate Support: $162.25. If it breaks here, the next major support isn't until the $142 – $148 range.

• Major Resistance: $187.50. The stock needs to clear this to break the "lower high" pattern and regain its bullish trajectory.

• Moving Averages: PLTR is currently trading below its 50-day SMA ($166.67), which acted as a ceiling during the most recent bounce attempt.

Summary: How to Time Your Entry

If you are looking to trade the earnings volatility, consider these two scenarios:

Scenario A: The Bullish "Speculative Bounce"

• Trigger: Wait for the stock to hold the $165 support level on earnings day and look for an RSI "hook" upward.

• Target: A quick rally back to $185.

• Risk: High. Only use this if the company beats revenue and raises 2026 guidance.

Scenario B: The Conservative "Wait-and-See"

• Trigger: If PLTR breaks below $160 post-earnings, do not "catch the falling knife." Wait for the stock to find a floor at the $142 support level.

• Target: Long-term accumulation at a much more reasonable (though still high) valuation.

Trading Pro-Tip: Because of the high implied volatility (IV) around Feb 2nd, buying straight "Call" options will be very expensive. Many traders are looking at Cash-Secured Puts at the $150 strike price — allowing them to either collect high premiums or get assigned the stock at a price they actually like.

Timing a position in Palantir (PLTR) right now is like trying to catch a lightning bolt. With earnings set for February 2nd and the stock hovering near critical support levels, you need a plan that balances its "expensive" valuation with its history of massive post-earnings moves.

The Long Straddle: Is it a good idea?

A Long Straddle (buying both a Call and a Put at the same strike) is the classic "I know it’s going to move, I just don't know which way" play.

• The Math: Currently, the options market is pricing in an implied move of roughly 10.7% (about $16.50 – $17.50) for the earnings week.

• The Risk (IV Crush): Implied Volatility (IV) for the Feb 6th expiration is spiked at over 80%. The moment earnings are released, IV will collapse. This means even if the stock moves $10, your options might lose value because you paid too much "volatility premium" to get in.

• Verdict: A straddle is high-risk right now. You only profit if PLTR moves more than 11% in either direction. Historically, PLTR has moved as much as 20-30%, but if it moves "only" 5-8%, the straddle will likely result in a total loss of premium.

Risk-Management Plan: The "Safety-First" Entry

If you want to enter a position but fear a post-earnings dump to $142, consider these three tiers of risk management:

Technical "Go/No-Go" Triggers

Use these levels to guide your manual entries during the first 30 minutes of trading on Feb 3rd (post-earnings):

• Bull Signal: A 15-minute candle close above $176. This breaks the immediate descending trendline and suggests a run back to the $187 resistance.

• Bear Signal: A daily close below $156. This confirms the "Head and Shoulders" breakdown. If this happens, technical sellers will likely push the stock toward the 200-day moving average (near $142).

• RSI Divergence: Watch if the price hits a "lower low" (below $157) while the RSI hits a "higher low" (above 35). This is a Bullish Divergence and often signals a bottom.

Summary Recommendation

Avoid the straddle unless you are certain of a "Nvidia-style" 15%+ blowout. Instead, look at the $150 strike price as your primary zone of interest—either for a limit buy or for selling puts.

Summary

As of January 30, 2026, Palantir (PLTR) is at a critical technical and fundamental crossroads. Here is a concise summary of the analysis provided:

1. The Valuation & Market Caution

Investors are increasingly wary of PLTR’s "priced for perfection" valuation. Even after a recent 20% pullback from its 52-week high of $207.52, the stock trades at roughly 147x forward earnings. The primary fear is an "AI CapEx saturation," where enterprise spending might slow, making these high multiples unsustainable.

2. Q4 2025 Earnings Outlook (Feb 2, 2026)

• Key Targets: Analysts expect Revenue of ~$1.35B (up 63% YoY) and Adjusted EPS of $0.23.

• Must-Watch Metric: U.S. Commercial Revenue growth. It recently grew at 121%; any significant dip below 100% could signal that the "AIP" (AI Platform) momentum is stalling.

• The "Rule of 40": Investors want to see this remain above 100% to justify the valuation.

3. Technical Chart Analysis

• Bearish Signals: A Head & Shoulders pattern is forming. The "Neckline" support at $160–$162 was recently breached, with the stock closing near $151.86 on Jan 29.

• Momentum: The MACD is bearish, and the RSI is deeply oversold (near 18). While "oversold" usually suggests a bounce, it currently reflects heavy selling pressure ahead of earnings.

• Support Levels: If the post-earnings reaction is negative, the next "floor" is expected at $142.

4. Strategic Trading Options

• Long Straddle: High-risk. Options are pricing in a 10.3% move (roughly $17). High Implied Volatility (IV) means an "IV Crush" could destroy profits unless the stock moves significantly more than 10%.

• Risk-Managed Entry: Instead of "catching a falling knife," consider selling Cash-Secured Puts at $145–$150. This allows you to either collect high premiums or acquire the stock at a technical support level you actually like.

Appreciate if you could share your thoughts in the comment section whether you think a cash-secured puts would be a better managed risk option play than long straddle?

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.