Introduction

Palantir Technologies Inc. (PLTR) has experienced a significant decline in its stock price, closing at $92.83, reflecting an 8.52% drop (-8.41%) on February 24, 2025. This marks a continuation of a broader selloff, with the stock falling over 20% from recent highs. The substantial price decline is driven by a combination of macroeconomic factors, insider activity, and market sentiment surrounding AI-related stocks.

Fundamental Analysis

Key Fundamental Drivers of the Decline

• Proposed U.S. Defence Budget Cuts – The Trump administration has announced plans to reduce the Pentagon’s budget by $50 billion annually over the next five years. Given that Palantir generates a large portion of its revenue from government defence contracts, these cuts have raised concerns about its long-term growth.
• Insider Selling by CEO Alex Karp – The CEO has planned to sell up to 9.975 million shares by September 2025, amounting to approximately $1.23 billion at current market prices. Large insider sales often erode investor confidence, as they may signal concerns about future company performance.
• AI Infrastructure Concerns – Recent reports indicate that Microsoft is reducing its data center leases, triggering broader concerns about a potential slowdown in AI-related infrastructure investments. Since Palantir’s AI-driven analytics business heavily depends on corporate and government adoption of AI, any slowdown in this sector could impact its valuation.
• Valuation and Market Perception – Despite impressive revenue growth, Palantir is still trading at a high valuation, which leaves little margin for error. Investors are now questioning whether the company’s growth justifies its premium price, especially given the potential slowdown in AI investments.

Technical Analysis

Palantir’s price action suggests a shift from bullish to bearish momentum, with several key technical breakdowns appearing on the chart.

Ichimoku Cloud Analysis

• Break Below Kijun-Sen (Base Line, $96.89) – The stock has broken below this critical support, indicating a weakening trend.
• Chikou Span (Lagging Span) Nears a Bearish Crossover – The Chikou Span (white line) is threatening to move below past price action, which could confirm a longer-term trend shift towards bearish momentum.

Support and Resistance Levels

• Immediate Support: $90 Psychological Level – A critical level that, if broken, could lead to a test of $85-$87, which was a previous consolidation zone.
• Resistance Levels:
  • $96.89 (Kijun-Sen) – The first key resistance level, which bulls must reclaim to reverse the downtrend.
  • $100-$103 Zone – A strong resistance area where prior highs and moving averages converge.

RSI (Relative Strength Index) Analysis

• RSI at 45.89 – The RSI has sharply declined from overbought conditions (above 70) and is now nearing oversold levels.
• Bearish RSI-Based Moving Average (72.17) – The RSI is currently below its moving average, confirming the strong downward momentum.
• Implication – While the stock is not yet oversold, further declines could push RSI below 40, which would confirm a deeper correction.

Volume Analysis

• Volume Spike to 125.84M – A significant increase in selling volume suggests strong distribution, meaning large institutional investors may be exiting positions.
• Implication – High selling volume with a bearish daily candle confirms intense selling pressure, reinforcing the downtrend.

Sentiment Analysis

The sentiment surrounding Palantir has turned decisively bearish, as reflected in several key investor metrics:

• Negative News Sentiment – While Palantir typically enjoys positive media coverage, recent news regarding defence budget cuts and insider selling has negatively impacted sentiment.
• Insider Selling – Over the past three months, insiders have sold approximately $473 million worth of shares, which raises red flags for investors.
• Short Interest – Short interest in Palantir is at 3.68% of outstanding shares, with a short interest ratio of 1.1 days to cover, indicating a moderate level of bearish sentiment.

Conclusion

Palantir Technologies is currently under significant pressure, with both technical and fundamental factors pointing towards further downside risk.

• The break below key Ichimoku Cloud levels and moving averages signals a potential trend reversal.
• High insider selling and defence budget cuts have raised concerns about future revenue streams.
• The stock’s valuation remains elevated, leaving it vulnerable to further declines if growth expectations are not met.

While long-term AI growth prospects remain strong, the current price action suggests a cautious approach. Bulls need to reclaim $96.89 (Kijun-Sen) and hold above $100 to regain momentum. Otherwise, a test of the $85-$87 range is likely.

Investors should closely monitor upcoming earnings reports, AI sector developments, and macroeconomic factors before making any trading decisions.

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