Can Palantir avoid a selloff after a failed breakout move?

Palantir stock has recovered from its mid-year collapse to net an 18% gain in 2026. The stock fell more than 40% between January and July, before mounting its current recovery during Q3. Goldman Sachs upgraded the stock to buy on October 8, citing sovereign AI demand, which pushed PLTR to $200. However, the stock pulled back later, failing to complete a breakout.

Like many AI companies, Palantir benefited from the bullish sentiment around AI in the second half of the year. However, as we head into the final quarter of 2026, investors are beginning to ask themselves whether the hefty AI capex can begin to deliver some returns soon.

Traders on Polymarket also seem to be relatively split about Palantir’s upside potential in October, with $204 given a 91% chance, while $210, which would set a new record for the stock, is at 73%.

Looking downwards, $192 and $186 have a 61% and 46% chance, respectively, while $180 is at a 27% chance.

The $186 price level looks very interesting, especially on a no-bet at 54%, which currently trades at $0.66 per share.

The overall market has attracted over $35k in volume, with the $186 price target locking in just over $2.3k.

What factors could affect Palantir's stock price in October?

Palantir’s pullback on Thursday came after the Financial Times reported that OpenAI’s annualized revenue in September fell short of forecast by $20 billion. 

This raises questions about the monetization aspects of AI compared to capex. Investors are already looking into Q3 earnings to evaluate whether the ROI from AI stocks matches their expectations.

Most AI companies have since yesterday experienced major pullbacks, with Nvidia down 3.22% from its October high.

Palantir’s premium valuation of 172.38 in price-to-earnings ratio also adds pressure, especially now that some investors will be re-evaluating their positions in AI stocks. Therefore, the chance for the stock to set a new all-time high, above $207, is constrained by these factors.

So could it drop all the way to $186? Friday morning, the shares traded just above $198. The stock has not closed below $187 in over two weeks now, and is building momentum ahead of its Q3 earnings report on November 2. 

Analysts have a consensus earnings estimate of $0.41 on Palantir’s Q3, which would be unchanged from Q2. This gives the company a huge opportunity to outperform analyst estimates, something it has done in each of the last 8 quarters.

The company raised guidance for Q3 in Q2, which should also keep investors optimistic heading into November, thus further limiting downside potential.