Palantir Stock Falls Below 50-Day Moving Average. Why It’s Under Pressure.

Palantir CEO Alex Karp said the company’s third-quarter earnings were ‘arguably the best results that any software company has ever delivered.’ (Tasos Katopodis/Getty Images for 137 Ventures/Founders Fund/Jacob Helberg)

Key Points

• Palantir Technologies stock fell 1% to $169.47. It has been trading below its 50-day moving average of $180.93 since Nov. 12.
• The stock is narrowly above its 100-day moving average of $169.24, after briefly dipping below it earlier in the day.
• Investor Michael Burry revealed a put option against Palantir with a notional value of $912 million last week.

Palantir Technologies stock has fallen below its 50-day moving average and was hovering dangerously close to its 100-day moving average on Tuesday—a sign that it could be headed lower.

Near midday, shares were 1% lower at $169.47, below their 50-day moving average of $180.93. The stock has traded below its 50-day moving average since Nov. 12, a classic signal that points to a intermediate-term shift from an upward trend to a decline.

The 50-day moving average often acts as an important level of support during an uptrend.

Palantir was also narrowly above its 100-day moving average of $169.24, after dipping below that level earlier in Tuesday’s session. The 100-day moving average tracks the average closing price over roughly 20 trading weeks, and a drop below it can signal a loss of momentum in the medium term.

The stock’s most recent peak came on Nov. 3, when it ended the session at $207.18, just minutes before the data-analytics company posted its earnings. It has failed to close above the $200 mark since then, despite Palantir posting what CEO Alex Karp called “arguably the best results that any software company has ever delivered.”

Scrutiny of artificial-intelligence players is high. The shares have been falling as enthusiasm for AI stocks fades, partly because of concern about valuations. As of Monday, Palantir stock was selling for 178.89 times the per-share earnings expected for the next 12 months, while the S&P 500 had a forward price-earnings ratio of 21.29 times.

Other AI-linked companies, even those with lower valuations, are under scrutiny as well. Two of the most formidable hyperscalers, Microsoft and Amazon.com , were downgraded to Neutral from Buy at Rothschild & Co. Redburn on Tuesday. Analyst Alexander Haissl urged investors to take “a more cautious stance.”

In another sign of the times, Nvidia and Microsoft stocks fell Tuesday after unveiling a strategic partnership with Anthropic, an announcement that would once have driven the shares higher. As recently as September, for example, Nvidia gained after the company said it was investing up to $100 billion in OpenAI.

Palantir has been especially pressured since the investor Michael Burry revealed last week that he was betting against the data-analytics company. In a securities filing, Burry’s Scion Asset Management reported a put option against Palantir with a notional value of $912 million, along with a separate option against Nvidia.

A put option gives a buyer the right to sell an underlying asset at a specific price before the option expires on a set date. It positions the option holder to benefit if prices fall.

Burry appeared to double down on his position in a social media post Monday. He wrote on X that a long position in Molina Healthcare and a put option on Palantir were “like peanut butter and bananas.”

The recent tumult comes ahead of earnings from Nvidia on Wednesday. It isn’t clear whether the results will infuse optimism back into the market, or signal that enthusiasm has petered out.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com