Stuck in a trading range since March 2021, Palantir (NYSE:PLTR) needs a positive catalyst to rally again. Yet, in recent trading sessions, the Nasdaq has started losing its bullish momentum. So, what does PLTR stock need in order to attract sustained buyers from here?

After high-flying software stocks like Amazon (NASDAQ:AMZN) and Pinterest (NYSE:PINS) pulled the technology index lower last week, nervous investors may worry about what will happen to PLTR shares next. However, this recent volatility just might create a buying opportunity. Plus, new contracts and initiatives might generate some upside potential.

Here’s what you should know about PLTR stock moving forward.

PLTR Stock Lost Momentum

Back in June, meme stocks drove momentum buyers to buy the proverbial rip and sell on the dip. For example, Reddit’s r/WallStreetBets often mentioned Palantir. By July, though, that trading momentum had waned. Basically, speculators could not afford to lose more money. With Gamestop (NYSE:GME) fading and ContextLogic (NASDAQ:WISH) failing to rally back to the teens, investors may have offset losses in those stocks by selling their PLTR shares.

At least, this may be part of how the stock has lost momentum. Recently, Palantir COO Shyam Sankar acknowledged how those meme investors have raised awareness around PLTR stock. Sankar said at the time that he was excited investors “really dug into” the company’s background.

Due to Palantir’s complicated product offering, though, customers also take months to evaluate its software. This could mean that the attention PLTR received from Wall Street in June may lift the company’s sales in the next few quarters. Plus, Palantir is targeting not only Fortune 500 companies but start-ups as well. On Jul. 20, it introduced Foundry for Builders, which gives early-stage companies access to the Palantir Foundry platform.

Palantir’s Foundry for Builders will capitalize on the company’s broad customer lineup. For example, Palantir wants customers in the health care, robotics and fintech markets.

CEO James Boyd said that Palantir Foundry allows the company to integrate its mobile capabilities into enterprise data systems. Further, Rick Ducott — Director of Engineering for Gecko, one of start-ups in the first round of the program — said his company is betting PLTR will help it scale operations immensely.

The need to help customers get from data to value will only grow in today’s digital world. That said, cautious investors should acknowledge the risk of a near-term slowdown in this trend.

The Risks and the Outlook

Last week’s Pinterest and Amazon drops are a reminder that the post-Covid world is a risk for PLTR stock. Although the Delta variant is starting to rage even among vaccinated countries, many governments are not reintroducing shutdowns.

So, the work-from-home catalyst that boosted revenue growth for software and e-commerce in 2020 and early 2021 is now absent. Investors do not know if customers will cut their software spending budgets next. If they do, Palantir’s revenue growth may slow.

That risk aside, though, Palantir reported revenue rising by 49% YOY to $341 million in its first quarter. Moreover, it forecast that upcoming Q2 revenue will grow by 43% to $360 million. The adjusted operating margin was also guided to be 23%. So, with corporate customers pressured to sustain their committed tech budgets, Palantir should meet its guidance. For full-year 2021, it may also beat its adjusted free cash flow guidance of $150 million.

Plus, PLTR announced on Jun. 18 that it won a contract with the Federal Aviation Admiration (FAA). The company will provide a data analytics tool that promotes aviation safety. Plus, now that flight volumes are increasing, the FAA may increase its project scope. This could lead to a bigger contract amount.

Lastly, on Jun. 8, the U.S. Centers for Disease Control and Prevention (CDC) rewarded Palantir with a $7.4 million contract renewal. PLTR will keep providing the CDC with “an outbreak response and disease surveillance solution.” And, since the Delta variant is now complicating the vaccine rollout and infection-containment measures, the CDC may increase its investment with the company, too.

The Takeaway on PLTR Stock

Right now, Wall Street analysts are not overly bullish on Palantir shares. According to Tipranks, the average price target is only $22.33. With measly upside potential ahead, investors may not want to buy the stock at current levels. But, should the Nasdaq’s volatility increase with more down days, Palantir may fall to a better buying price zone.

So, investors who missed PLTR stock when it started trading at $10 should have another chance. If the stock falls in the high teens, buyers will probably buy the dip.

Palantir’s next earnings report is also a potential catalyst. If it wins bigger contracts, the stock may rally again.

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On the date of publication, Chris Lau did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Chris Lau is a contributing author for InvestorPlace.com and numerous other financial sites. Chris has over 20 years of investing experience in the stock market and runs the Do-It-Yourself Value Investing Marketplace on Seeking Alpha. He shares his stock picks so readers get original insight that helps improve investment returns.