The stock price has fallen below multiple moving averages. Palantir (PLTR.US) must "astonish everyone" with its performance tonight.

Palantir Technologies Inc. (PLTR.US) stock price did not rise before the quarterly earnings report for the first time in two years - a signal that investors are increasingly lacking reasons to chase after this stock, which has become one of the most expensive stocks in the S&P 500 index. Since reaching a peak in November last year (before Palantir's last earnings report), the stock price of this software company has dropped by 29%, and has fallen by 18% since the beginning of 2026, making it one of the worst-performing stocks in the S&P 500 index this year. Despite this round of selling pressure lowering Palantir's valuation, its price-to-earnings ratio is still around 142 times expected earnings, ranking third highest in the S&P 500 index. Despite the high valuation, Wall Street still expects Palantir to deliver solid growth performance. Analysts covering the company expect its fourth-quarter adjusted earnings per share to increase by 63% to 23 cents in 2025, with revenue expected to reach $1.3 billion, a 61% year-on-year increase. Mark Giarelli of Morningstar Investment Services stated, "At the end of the day, what investors want now is solid performance and reasonable valuation, which is an attractive investment target." Currently, he has a "sell" rating on Palantir with a target price of $135. As Palantir releases its earnings report, doubts about large tech companies in the market are growing, with investors demanding returns on the massive investments in artificial intelligence (AI) infrastructure. This sentiment is dragging down the overall performance of tech stocks, with traders' focus shifting from early winners in the AI trend to companies expected to benefit from the hundreds of billions promised to be invested by giant companies like Amazon.com, Inc. (AMZN.US), Alphabet Inc. Class C (GOOGL.US), and Microsoft Corporation (MSFT.US). Companies believed to be impacted by AI development, including various software stocks, are also experiencing declining stock prices. Under multiple factors, Palantir is under immense pressure and must provide better-than-expected performance guidance to prove its high valuation is justified. However, Research Affiliates Chief Investment Officer Que Nguyen believes that the company's valuation falling from its peak in late October last year can also be seen as a positive signal for the stock price. Nguyen stated in an email, "It is comforting to see that the company's development is gradually matching investor expectations, and investors are not irrationally raising expectations." The recent decline in Palantir's stock price also provides room for a rebound. Currently, the company's stock price has fallen below the key moving averages of 50-day, 100-day, and 200-day, approaching oversold territory. Jake Behan, Capital Markets Director at Direxion, said, "Some small-scale support levels have appeared below the stock price." High performance threshold Palantir will release its earnings report after the closing of the U.S. stock market on Monday, which may determine the future direction of its stock price. Gil Luria of DA Davidson said, "There is no reason to believe that Palantir will not achieve good results this quarter, and the market dynamics this quarter have not changed that possibility. But it must be said that the company has already raised market expectations to a very high level, and its performance in the past few quarters has been very impressive. To exceed expectations again, will be a challenge." If Palantir can achieve growth in several core business segments in the upcoming earnings report, it may reignite its stock price momentum and replicate last year's 135% gain. Government contracts contribute more than half of Palantir's revenue, with analysts expecting revenue from this sector to increase by over 50% year-on-year this quarter. Investors are also closely watching Palantir's progress in expanding its commercial business footprint, with analysts predicting that revenue from the U.S. commercial sector in the fourth quarter of 2025 will be close to $650 million, a year-on-year increase of over 70%. However, even if the company releases optimistic statements, investors may still be cautious about buying Palantir due to the overall market sentiment of the software sector. Previously, after the earnings reports of Microsoft Corporation and ServiceNow (NOW.US), their stock prices plummeted, dragging down overall market performance last Thursday. Joe Tigay, portfolio manager at Equity Armor Investments holding Palantir stock, said, "To avoid following the footsteps of ServiceNow and Microsoft Corporation, Palantir not only needs to surpass performance expectations, but its performance guidance must at least meet market expectations, or even better." He added that if Palantir provided a more conservative outlook on performance, the capital market would not push its stock price higher. Behan of Direxion believes that the statements of Palantir CEO Alex Karp during the earnings report release period could be a potential catalyst for the company's stock price. Behan said, "It is well known that Karp has always been a staunch advocate for his company. Frankly, regardless of the financial data, I believe he can attract some buyers, otherwise I would be surprised."