Palantir stock rallied early Wednesday, before turning red later in the session, as the AI powerhouse joined a broad market retreat.
Palantir fell for the third straight day, shedding 4% to close at 71.51.
Palantir had been on a roll, emerging as a major AI stock, especially given its strong position in the defense industry.
On Wednesday, William Blair analyst Louie DiPalma said the Army has awarded Palantir a $401 million contract extension related to its AI-powered Army Vantage platform.
"While this extension appears lower than the original contract, it is possible that the value increases," DiPalma said in a client note, saying the "total ceiling value" could reach $619 million.
Palantir also appeared to demonstrate Wednesday that its technology isn't just for war.
The company announced a partnership with Pray.com, which makes an app "for daily prayer and faith-based content," to "accelerate new product launches."
Nasdaq Inc. recently announced that Palantir will be added to the Nasdaq 100 before the market opens Dec. 23. Shares reversed lower after hitting record highs on Dec. 9 following that news. That's partly due to PLTR stock jumping as the company announced it was moving its listing to the Nasdaq, making a Nasdaq 100 entry highly likely.
But last week, Baird analyst William Power also warned against chasing Palantir stock gains, noting the shares have outpaced the S&P 500 big time, "suggesting high expectations, though we also acknowledge the strong, accelerating operating momentum."
Palantir Stock Setting Up?
Palantir stock is still trading well above its 21-day and 50-day averages, according to IBD MarketSurge. The stock held on to a perfect Relative Strength Rating of 99.
PLTR stock is on track to have a three-weeks-tight pattern after this week with an 80.91 buy point for existing holders to add shares. Investors could use Monday's high of 77.82 as an early entry.
Palantir is up well more than 300% in 2024, making it the S&P 500's top performer by far.
