Palantir Q4 Earnings Countdown: Bullish Charts Vs. Bearish Analysts

As we approach Palantir Technologies' (PLTR) fourth-quarter earnings release, investors are grappling with a peculiar conundrum: bullish chart patterns versus bearish analyst sentiment. The stock has been on a tear, nearly quintupling in value over the past 12 months, yet analysts remain largely skeptical about its ability to sustain this momentum. Let's dive into the key factors driving this divergence and explore what it might mean for Palantir's earnings potential.

Palantir's stock has been on a meteoric rise, fueled by strong performance metrics and guidance. In the third quarter, the company reported revenue growth of 30% year-over-year, beating Wall Street's expectations. Adjusted EPS increased 43%, also surpassing analyst estimates. This robust performance, coupled with the company's history of issuing guidance that exceeds expectations, has contributed to the bullish chart patterns.



However, analysts are largely skeptical about Palantir's ability to sustain this momentum. None of the 13 analysts covering the stock tracked by Visible Alpha expect the stock has further to rise, with their consensus price target of $50 almost 40% below the stock's record-high close at $82.49. This discrepancy in views may be attributed to several factors:

1. Valuation concerns: Some analysts may view Palantir's stock as overvalued, given its high premium and the potential for decelerating growth to cause concern.
2. Market buzz vs. official contracts: While there is market buzz about Palantir potentially getting work from the incoming Trump administration's Department of Government Efficiency, investors should not expect management to comment on this topic unless and until there are official contracts. This uncertainty may contribute to the discrepancy in analysts' views.
3. Variability in large deal closings: Quarterly revenue may be somewhat "lumpy" due to variability in the timing of the close of large deals. This could lead to fluctuations in performance and make it challenging for analysts to accurately predict future results.
4. Differing opinions on revenue potential: Some analysts, like Wedbush, believe that Wall Street is underestimating the revenue potential of Palantir's Artificial Intelligence Platform. However, others, such as Jefferies, maintain a more cautious stance, suggesting that any signs of decelerating growth could cause concern.

Palantir's Artificial Intelligence Platform (AIP) has seen strong demand from both government and commercial customers, driving revenue growth. In the third quarter, its government business accounted for 56% of total revenue, with the AIP being a significant contributor to this growth. This robust adoption of AIP could continue to boost earnings potential.

As we await Palantir's fourth-quarter earnings release, investors must weigh the bullish chart patterns against the bearish analyst sentiment. While the company's strong performance metrics and guidance may suggest continued growth, analysts' concerns about valuation, market buzz, and revenue potential could temper expectations. Ultimately, Palantir's earnings potential will depend on its ability to execute on its growth strategies and navigate the challenges that lie ahead.