Palantir Stock Forecast: PLTR advances following $250 million Army contract

Palantir (PLTR) stock has advanced 1% to $14.10 in Wednesday’s premarket after the artificial intelligence-inflected (AI) data miner won a $250 million, three-year contract with a unit from the US Army.

US equity futures are higher in Wednesday’s premarket after losing substantial ground this week. S&P 500 and NASDAQ 100 futures are both ahead by more than 0.4% at the time of writing.

Palantir stock news: Research contract given to Palantir for Maryland Army unit

Early Wednesday, the Army Contracting Command attached to the Aberdeen Proving Ground in Maryland approved Palantir for a $250 million contract to provide research related to AI and machine learning.

The “firm-fixed-price” contract runs through September 25, 2026. As is the norm, the Army did not provide much in the way of details on the specific contract other than to say it involved R&D. 

The announcement comes one week after Palantir’s Software for Government Summit. US government revenue still constitutes Palantir’s largest revenue source. For the second quarter of this year, US government revenue rose 10% YoY to $225 million, and a large share of it stems directly from various units of the US military.

Of the US-based revenue in the second quarter, more than 68% came from its government operations. Still, Palantir has been rolling out its Artificial Intelligence Platform (AIP) at a quick pace so far in the third quarter. The company has announced contracts and partnerships with Houston investment manager CAZ Investments, UK-based defense firm Babcock International Group and Italian research hospital Policlinico Gemelli all in the last month.

Palantir stock forecast

Palantir stock has been using the $13.50 to $14 support range as a crutch going back to late June. This is now the fourth period in which this range has come in handy. Any close below $13.50 will spell a sell signal as the next historical support comes 24% lower at $10.25. 

The Relative Strength Index (RSI) is now at 38, which still puts it above the oversold signal that coincides with a reading of 30 or below. Palantir has rarely traded into oversold territory on the daily chart however. The last time this happened in any extended fashion was in May 2022. Palantir’s May 2023 rally began when PLTR shares ranged down to an RSI reading of 34. 

Palantir will be back on a more attractive footing once it climbs above the 21-day Simple Moving Average (SMA), which is currently at $15.10. The US equity market has been trending lower since July, and this pressure has been felt by Palantir as well. The S&P 500 is down 3.6% over the past month and 2.1% over the past five sessions.

PLTR daily chart