Palantir Stock Volatility: AI Potential vs. Market Concerns

Palantir Jumped Today. Is the Artificial Intelligence (AI) Stock a Buy

The artificial intelligence (AI) software leader's share price was climbing following news that new 25% tariffs on automobiles imported from Mexico and Canada will be delayed a month. The tariffs could cause major pricing increases on vehicles in the U.S., and were viewed by some economists and industry experts as potentially having a destabilizing impact on the auto market. While the auto news doesn't impact Palantir directly, it was having an impact on valuations across the broader market as investors are showing signs of relief that one of the most potentially impactful developments from new tariff policies is being pushed further out and may get resolved before going into effect. In addition to developments on the tariff front, Palantir stock also seems to have gotten a lift from analyst coverage. William Blair published coverage on the company and upgraded its rating on the stock from underperform to market perform. The firm's analysts said they still think Palantir's heavily forward-looking valuation creates big downside risk, but they believe that shares are more reasonably valued on the heels of sell-offs that have taken place over the last month. Is Palantir stock a buy right now? Following an impressive rally last year, Palantir stock has been highly volatile in 2025. While the company's share price is still up 18% across this year's trading, it's also down 28.5% from its high mark even after today's gains. In addition to macroeconomic and geopolitical volatility, Palantir stock has seen some downward pressures as investors struggle with how to value the business and assess its long-term opportunity. Despite some big sell-offs over the last month, Palantir is still valued at approximately 160 times this year's expected earnings and 55 times expected sales. Palantir has an extremely growth-dependent valuation -- and one that sets the stage for significant downside risk if business performance comes in below expectations or macro conditions worsen significantly. On the other hand, the company has a clear leadership position in areas of the AI software market that are poised for massive long-term growth. For long-term investors, I think that taking a buy-and-hold approach to Palantir stock at today's prices will be a winning move despite volatility.

Palantir has Dropped 30%. Is the Stock a Buy on the Dip? | The Motley Fool

Palantir Technologies (PLTR 1.18%) has been one of the high-flyers of the artificial intelligence (AI) boom. The company's earnings and share price have soared in recent years thanks to its AI-driven software that allows governments and businesses to pump up efficiency, drive down costs, and make game-changing moves. Quarter after quarter, the company has reported double-digit revenue gains in its government and commercial businesses. And the stock advanced more than 1,100% since its market debut in 2020 through early February of this year, continuing to roar higher even as some analysts sounded the warning bell, saying the stock had become too expensive. Finally, a plan from the Pentagon -- a major Palantir customer -- to launch budget cuts was the element to send shares tumbling. Over the past two weeks, the stock has retreated more than 30%. Are investors right to worry about this potential headwind and stay away from Palantir, or is the stock a buy on the dip? Let's find out. First, a quick summary of the Palantir story so far. The company offers software systems that help its customers aggregate disparate data so they can make better use of valuable information. A little over a year ago, it launched its Artificial Intelligence Platform (AIP), which harnesses the power of large language models (LLMs) to incorporate AI into the data collection and analysis process. This has become a highly popular product, allowing corporate and government customers to make AI-driven decisions in real time. For example, in a demonstration video, Palantir shows how AIP is able to quickly evaluate risk on a battlefield, devise three potential plans of action, and send them up the chain of command for consideration. Palantir has recently seen a surge in commercial business as companies seek to leverage AI for growth, but the company's biggest customer over time has been the U.S. government. In the latest quarter, it accounted for more than 40% of Palantir's total revenue. So, it's no surprise that news of spending cuts at the U.S. Department of Defense would spark worries about Palantir's earnings prospects. Now, the question is whether these worries are warranted. The department said last month that it would cut 8%, or about $50 billion, from certain programs in the current budget and reallocate the money toward President Trump's priority defense programs. "That's not a cut; it's refocusing and reinvesting existing funds," said Pete Hegseth, defense secretary, in a statement. The idea that this is a reallocation and not a cut suggests this news may not weigh on Palantir's business. In fact, AIP's broad range of uses and its ability to improve efficiency could make it a sought-after tool across many government programs -- from defense to other departments -- especially considering the Trump administration's focus on efficiency. This actually might result in more demand for AIP, potentially working in Palantir's favor. So, at this point, concerns about this news hurting Palantir's growth may be overdone. It's also important to remember that Palantir's commercial business is growing in leaps and bounds. The company only had 14 U.S. commercial customers four years ago, and it now has 382. And these customers are bringing in more and more revenue. In the latest quarter, Palantir closed more than $800 million in U.S. commercial total contract value -- a record. That's a 134% increase over the year-earlier period. So Palantir, which once was associated mainly with government contracts, no longer depends so heavily on that business. Now, let's take a look at valuation. Though Palantir still seems pricey trading at 149x forward earnings estimates, it's worth considering another metric that incorporates growth -- since Palantir is a high-growth company. And that's the PEG ratio, which today is about 0.7. A PEG ratio of less than 1, suggests a stock may be undervalued, meaning Palantir could be an excellent buy right now from this perspective. Of course, the Defense Department news still could weigh on demand for Palantir stock until we know exactly how funds will be allocated. So, it's impossible to predict whether the stock will immediately rebound. Some investors might wait to be 100% certain that these government moves won't hurt Palantir before getting in on the stock. So, what should you do in this case? The decision depends on your comfort with risk. If you're a very cautious investor, you may want to remain on the sidelines until the stock price stabilizes -- and be on the lookout for more details about how the government will allocate funds. But for investors who can accept some risk and plan on holding on for the long term, Palantir makes a fantastic AI buy now on the dip.

Palantir Technologies Stock Is Dropping Like a Rock. Should You Start Buying? | The Motley Fool

Palantir Technologies (PLTR 0.18%) got off to a red-hot start in 2025 and quickly registered gains of more than 60% in less than two months, hitting a 52-week high on Feb. 18, but it has been retreating rapidly since then. More specifically, Palantir stock has shed 28% of its value since Feb. 18. The steep decline in Palantir's shares can be attributed to a combination of a potential reduction in the Pentagon's budget over the next five years and the possibility of CEO Alex Karp selling more than $1.2 billion worth of stock. It is worth noting that Karp sold close to $1.9 billion worth of Palantir stock last year, capitalizing on the stock's stunning rise in 2024. These developments have triggered a major correction in Palantir stock of late, and that's not surprising considering the expensive valuation at which this software and analytics provider has been trading. Moreover, Palantir's next quarterly report is more than two months away. Palantir's outstanding rally has been powered by its stronger-than-expected results and guidance in recent quarters, so there is a possibility that its slide may continue for the next few weeks on account of the negative sentiment. But if that's indeed the case, will it be a good idea for savvy long-term investors to buy this hot growth stock? Let's find out. A press release issued by the U.S. Department of Defense on Feb. 20 points out that the Pentagon's reduction will be aimed at "cutting fiscal fraud, waste and abuse at DOD while also finding ways to refocus the department's budget." Defense Secretary Pete Hegseth points out that the Pentagon will refocus and reinvest existing funds into areas considered important by the Trump administration. What's more, areas such as missile defense, drone technology, and cybersecurity are unlikely to be impacted by the Pentagon's plan. A key reason Palantir stock has been plunging is because it gets a nice chunk of its revenue from supplying software and analytics solutions to government agencies. In the fourth quarter of 2024, for instance, 55% of the company's revenue was government-related. Palantir has made its name by building and deploying software platforms for the U.S. intelligence community and the armed forces. So, it is easy to see why investors pressed the panic button following the Pentagon's announcement. However, the Pentagon's focus on increasing efficiency as well as the continued spending on certain areas pointed out above could augur well for Palantir. That's because the company's Artificial Intelligence Platform (AIP) has been designed to improve the decision-making capabilities and the operational efficiency of both commercial enterprises and government agencies, which is why the adoption of this platform has strengthened impressively in recent quarters. Moreover, Palantir's AI tools have been in solid demand from the U.S. armed forces, which have offered the company lucrative contracts in recent months. As a result, Palantir's government revenue grew at a faster pace of 40% in the previous quarter as compared to the 31% increase in commercial revenue. Moreover, Palantir management remains optimistic about the state of its government business given the current administration's focus on efficiency. Responding to an analyst query on the company's recent earnings conference call, CTO Shyam Sankar remarked: ... [W]e sense a huge amount of fear among the traditional system integrators and providers here (the traditional providers of the monopsony), but we're pretty optimistic. And I think if you look at my comments over the past, even my recent Senate Armed Services testimony last week, Palantir's real competition is a lack of accountability in government. These forever software projects that cost an insane amount that don't actually deliver results, they're sacred cows of the deep state. He went on to highlight Palantir's ability to deliver results at much lower costs, suggesting that the Pentagon's cuts may not hinder its prospects. Palantir now has a thriving commercial business. Its commercial revenue increased impressively last quarter, and that trend is likely to continue as customers tend to expand their usage of AIP after signing the initial contract. It is worth noting that Palantir's commercial customer count increased by 52% last year to 571, and an increase in spending by the new customers that it has brought on board could act as tailwinds for both its top and bottom lines. Additionally, the bigger deals that Palantir's customers are now signing with the company led to a 40% jump in its remaining deal value last quarter to $5.4 billion. This metric refers to the total value of contracts that Palantir has yet to fulfill at the end of a quarter. The growth in this metric outpaced the 36% year-over-year increase in Palantir's top line last quarter, suggesting that it is landing more contracts now than it is fulfilling. So, investors would do well to focus on the bigger picture, as Palantir's prospects may not be affected by the Pentagon's proposed cuts. Of course, the recent pullback has made the stock a tad less expensive, but it still commands a massive premium. However, it may be a good idea to accumulate Palantir stock if it continues to head lower in the coming weeks. After all, the company is one of the leading players in the lucrative AI software platforms market that's set for outstanding growth in the coming years, which could help Palantir justify its expensive valuation on the back of its robust unit economics.

Why Palantir Technologies Stock Rallied on Wednesday | The Motley Fool

The catalyst that sent the artificial intelligence (AI) software and data mining specialist higher was a little love from Wall Street. Palantir had been on fire, climbing as much as 1,250% during the preceding two years before it reached its zenith last month. Since then, the stock has taken it on the chin, falling as much as 32%. And therein lies the opportunity. William Blair analyst Louie DiPalma, a longtime Palantir bear, reversed course on Wednesday, upgrading the stock from underperform (sell) to market perform (hold), though he didn't supply a price target. The analyst cited "the 33% [Department of Government Efficiency]-driven sell-off from $125 to $84 over the past three weeks" for his change of heart. The analyst points out that the stock remains "frothy with potential downside risk of greater than 40% on government contract delays," but goes on to say, "there have been positive developments." DiPalma cites Palantir's robust revenue growth and increasing operating margins, which he calls "the highest in all software." In a rare mea culpa, the analyst admits, "We did not fully appreciate Palantir's operating leverage and ability to grow with minimal hiring." At 160 times forward earnings and 56 times forward sales, Palantir still isn't cheap yet. However, the stock's forward price/earnings-to-growth (PEG) ratio -- which factors in the company's impressive growth -- recently declined to 0.8, when any number less than 1 suggests a stock that is fairly valued. Given its recent decline and strong runway for growth ahead, it might finally be time to start looking at Palantir.

Palantir Crashes 30% From a 3-Year High of $125 -- What History Says Happens Next | The Motley Fool

Shares of Palantir Technologies (PLTR 1.67%) are up 280% in the past year. Although an impressive run-up, it is still nearly 30% lower than its three-year high of $125 on February 18. The company delivered an exceptionally strong fourth-quarter report on Feb. 3, showing that its revenues rose 36% year over year to $828 million, significantly exceeding the analysts' consensus estimate of $775 million. That top-line growth rate was particularly impressive considering that it was an acceleration from the 30% revenue growth rate reported in Q3, and came relative to a higher base. While the stock initially reacted favorably to the earnings results, the excitement seems to be dying down. Investors are concerned about CEO Alex Karp disclosing plans to sell $1.2 billion worth of the company's shares. Palantir has also been negatively impacted by the news last week that Defense Secretary Pete Hegseth ordered the military to prepare plans for significant budget cuts over the next five years. So now the question is: Is this valuation retreat a buying opportunity or is Palantir's bubble finally ready to burst? Unlike many artificial intelligence (AI) players that have focused on developing advanced foundation models, Palantir has built its operation around a proprietary ontology system -- which gives more importance to effective AI implementation across enterprise use cases. Ontologies create digital frameworks that organize and define how an organization's assets, both digital and real-world, relate to each other. This helps Palantir create "digital twins" of the clients' operations, unifying and connecting their fragmented data assets, and clarifying the dynamic relationships between them. Since it can take decades of work and investment to build a robust ontology system, what Palantir offers its clients is not easily replicable. This has become a major competitive advantage for Palantir. The Palantir Artificial Intelligence Platform (AIP) also emerged as a major catalyst. AIP enables clients to seamlessly integrate generative AI into their operations, allowing them to rapidly deploy AI tools for real-world use cases in a secure, observable, and well-governed fashion. Palantir's recent go-to-market strategy centered on AIP "boot camps," during which they start with a real and pressing business issue for the potential client, and show them exactly how Palantir's tools can be used to address it. The result has been an acceleration in sales conversion rates. AIP has been a major growth driver for Palantir's U.S. commercial business. As of the end of 2024, the company had 382 U.S. commercial customers, almost five times more than it had three years ago (before the launch of AIP). Its U.S. commercial segment revenues were up 64% year over year in the fourth quarter, and up 20% sequentially. The segment also recorded its strongest quarter of total contract value -- $803 million, up 134% year over year and 170% sequentially. Finally, Palantir's U.S. government business remains robust, growing by 45% year over year and 7% sequentially in the fourth quarter. Despite the business' many positives, it is undeniable that Palantir stock is trading at an unsustainable valuation level. Even after its recent share price slide, it still trades at nearly 196 times forward earnings. Palantir's stock is still up by 19% so far in 2025 -- a significant drop from over 40% gains a week ago. A look at the company's historical performance can give a better idea of what can happen next. Data Source: Yahoo! Finance. Calculations by author. Historically, Palantir has been highly volatile. Every major share price high has been followed by a significant correction. Palantir's shares seem to be following the same roadmap this time. However, it is undeniable that the company's fundamentals are stronger this time around, thanks to the strength of its AI initiatives and its rapidly expanding commercial and government businesses. The company is also profitable, with GAAP net income of $462 million and adjusted free cash flow of $1.25 billion in 2024. The dramatic share price pullback within a week seems quite unjustified. Against this backdrop, long-term investors with significant risk tolerance could consider taking a small stake in Palantir -- although caution is still warranted. Since the share price bottom is not yet clear, investors who choose to add it to their portfolios would do well to consider using a dollar-cost averaging strategy. This would expose them to Palantir's upside potential while reducing their overall risk.

Palantir stock dips 5% but insiders say AI's future will make this look cheap

Palantir Technologies Inc. Class A (PLTR) stock closed at $84.77 on February 27, 2025, marking a sharp drop of $4.55, or 5.10%. Pre-market trading on February 28 saw a further decline to $82.77, down $2.00, or 2.36%. Palantir's stock has been rocked by a turbulent month. After hitting an all-time high of $124.62 on February 18, shares plummeted nearly 30%, stemming from CEO Alex Karp's announcement to sell up to 10 million shares -- a move that raised eyebrows among investors. On February 19, troubling news of an 8% Pentagon budget cut spooked the market, given Palantir's dependence on government contracts for nearly 60% of its revenues. Fear of reduced defense spending led to significant sell-offs, although some analysts remain optimistic about the company's growth potential. The earnings report on February 3 showcased impressive growth: 73% increase in U.S. commercial customers and 63% rise in U.S. commercial revenue year-over-year. This strong performance initially sparked a robust $4.55 surge on February 4, highlighting Palantir's status as a leader in the AI sector. Recent strategic partnerships bolster optimism. A multi-year agreement with SAUR Group to utilize generative AI for contract management was announced on February 19. However, concerns linger regarding execution amidst competitive pressures and budget cuts. Despite the current volatility, Palantir remains well above its 200-day moving average, suggesting some long-term strength. Yet, with its high valuation compared to earnings, investors are cautious amidst a broader AI sector slowdown. Market sentiment is mixed. Traders on X are debating Palantir's future -- while some hail its prowess in software solutions, others worry about potential macroeconomic setbacks, including tariff hikes that could influence tech spending. Palantir just took a $50 million it -- will it survive? The recent announcement regarding the company's expansion into key international markets indicates a drive towards growth that may enhance its competitive positioning. Investors should be attentive to how these market entries are executed and the potential impacts on revenue streams. Success in these markets could lead to a notable increase in the company's market capitalization as it diversifies its geographic reach and mitigates reliance on domestic sales. Analysts are particularly focused on the implications of the new product launch slated to occur alongside this expansion. If the product resonates with consumers in these new regions, it could not only boost sales but also elevate the brand's reputation globally. Investors ought to monitor early sales figures and consumer feedback closely, as these indicators could signal the success or failure of this strategic initiative. The company's decision to enhance its digital infrastructure marks a pivotal shift towards modernizing operations. For investors, the efficiency gains and cost reductions from this investment may take time to manifest. Observing quarterly reports for any early signs of improved operational metrics or reduced overhead costs could provide insight into the effectiveness of this strategy and its return on investment. Moreover, the strategic hiring of key personnel with vast experience in international marketing and operations could indicate the company's commitment to executing its global strategy effectively. Investors should track any changes in management and personnel dynamics, as these could provide additional clues about the likelihood of successful implementation of the new initiatives. Leadership changes can often affect stock performance based on investor confidence in the new team's capabilities. The potential for regulatory challenges in the newly targeted markets warrants serious consideration. Investors must remain vigilant regarding any legal or compliance issues that may arise as the company navigates different regulatory environments. Any setbacks in regulatory approvals could delay market entry plans, impacting projected revenue timelines and creating volatility in stock valuations. Disclaimer: The content of this article is for informational purposes only and should not be construed as investment advice. We do not endorse any specific investment strategies or make recommendations regarding the purchase or sale of any securities.

Where Will Palantir Stock Be in 1 Year? | The Motley Fool

Investors in Palantir Technologies (PLTR 6.79%) have been on a roller-coaster ride lately as shares in the data analytics company have retreated by a whopping 32% from an all-time high of $124.6 reached last month. While the stock remains a way for investors to bet on the fast-growing artificial intelligence (AI) opportunity, these declines come as no surprise to those who have been pointing out Palantir's uncomfortably high valuation. So what comes next? Let's dig deeper to see what the next 12 months could have in store. It's impossible to pinpoint a single cause for Palantir's rocket-ship rally. However, with shares up by around 67% since Nov. 5, Donald Trump's election victory has been a catalyst for the stock. But while Palantir's co-founder, Peter Thiel, has a good relationship with the president (he raised money for the campaign and even introduced him to his vice president, JD Vance), it is hard to see how these things will directly create shareholder value. In many ways, the Trump administration's policy could reduce demand for Palantir's services, which include data analytics for military contexts. For example, Palantir helps the Ukrainian armed forces with combat targeting against Russia. Under the leadership of new Defense Secretary Pete Hegseth, the Pentagon has proposed cutting 8% of its budget in each of the next five years (around $50 billion each year). If this move goes through, it could dramatically shrink the pocketbook of one of Palantir's core clients. There is some silver lining to the situation. For starters, Palantir is an AI company, which means its defense opportunity may be spared from drastic cuts as the Pentagon reorients toward next-generation combat capabilities. The company also has significant commercial operations that can help drive growth, even if the government opportunity shrinks. Fourth-quarter revenue grew 36% year over year to $828 million, helped by a 64% jump in U.S. commercial revenue to $214 million (26% of the total). While Palantir's commercial business currently makes up a small percentage of total revenue, the opportunity is growing rapidly as more companies incorporate data analytics and AI into their decision-making processes. That said, when it comes to profitability, Palantir still has a lot of work to do. While fourth-quarter adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 46% to $379.5 billion, this figure adds back a jaw-dropping $281.8 million in stock-based compensation. Stock-based compensation is equity given to employees. And while it can motivate talent, it also dilutes existing shareholders by reducing their ownership claim on the company. In Palantir's case, the level of dilution looks excessive at around 34% of total revenue. This problem is worsening, with the total amount of stock-based compensation more than doubling compared to the prior-year period. With a forward price-to-earnings (P/E) multiple of 147, Palantir stock looks overvalued. To put that figure in context, the S&P 500 has an average forward P/E of 22, while AI industry leader Nvidia reports just 28 despite enjoying a substantially higher growth rate of 78% in the fourth quarter. Palantir's valuation doesn't account for the risks it faces from Pentagon downsizing. And its extreme stock-based compensation will dampen per-share earnings growth under generally accepted accounting principles (GAAP). Investors who buy Palantir stock now face profound downside risk.

In a 30% Drawdown, What's Going On With Palantir Stock?

After the U.S. presidential election, Palantir Technologies (PLTR 0.18%) stock soared about 200%. But since hitting its all-time high on Feb. 19, the stock is down over 30%. The artificial intelligence (AI) company is growing quickly, but due to its reliance on government contracts, investors are worried that potential budget cuts at the Department of Defense and other government agencies could hurt the business. Despite the drawdown, Palantir is still valued at over $195 billion. What's going on with Palantir stock? Is now a good time to buy the dip? Let's take a closer look at this software upstart and see how the stock could fit into your portfolio. Budget cuts at the Pentagon The Trump administration has come out swinging with its cost-cutting initiatives at the federal government. The focus has now shifted to the Department of Defense and its $850 billion annual budget, one of the government's largest outlays each year. New Secretary of Defense Pete Hegseth said he aims to cut 8% from the defense budget every year for the next five years. That is not a one-time cut of 8% but five consecutive years of cuts. Hegseth is starting with civilian workers, aiming to cut over 5,000 people from the payroll. Investors took this as a negative sign for Palantir and other defense contractors, breaking what momentum the stock had after its Q4 earnings results. As of this writing, the stock has fallen in six of the last eight trading sessions. While budget cuts may prove a headwind over the long term for defense contractors, I could also see an argument that they're bullish for Palantir. Why? Because efficiency gains are what Palantir is selling to the federal government. Its software and AI tools are supposed to enhance productivity, which could mean new contracts if they lead to overall cost savings. In 2024, Palantir generated $1.57 billion in revenue from government contracts, making it only a small part of the federal budget. Despite the current administration's proposed cost cuts, I still expect this figure to grow in the coming years. Palantir is more than government contracts In recent years, government contracts have also become a shrinking share of Palantir's top line. A push into the commercial sector has been very successful with the company winning hundreds of customers for its AI and software tools. U.S. commercial revenue grew 64% year over year in Q4 2024 to $214 million, and the commercial segment now makes up 45% of overall sales. While the government segment is still growing, the commercial side is growing even faster. The commercial market is simply much larger and could provide a $10 billion-plus revenue opportunity for Palantir. Last quarter, its backlog for U.S. commercial contracts grew 99% year over year to $1.79 billion. This trend should help Palantir diversify away from federal government contracts. If budget cuts at the Department of Defense do affect the company, it won't kill the entire business. Despite falling 32% in less than two weeks, Palantir stock is not necessarily a buy. Before the sell-off, Palantir had a price-to-sales ratio (P/S) of more than 100. It sits at 73 as of this writing, and this big a premium comes with truly high expectations for future growth and earnings. To illustrate, consider that Palantir generated $2.87 billion in revenue last year. If the company grows its revenue by 30% annually for the next five years, its top line will reach $10.65 billion. Apply a 30% profit margin -- which would be a significant expansion from current levels -- and you get $3.20 billion in annual earnings. Based on Palantir's nearly $200 billion market cap as of this writing, that bullish five-year earnings estimate would still leave the stock with a price-to-earnings ratio (P/E) of 62. In other words, even if Palantir keeps up its current growth streak while nearly doubling its profitability, the stock still looks overpriced following its drawdown. Valuation matters, and investors would be wise to approach this stock with caution.

Are Analysts all Wrong About Palantir Technologies Stock? | The Motley Fool

Data analytics and artificial intelligence (AI) company Palantir Technologies (PLTR 1.18%) has been one of the hottest growth stocks to own over the past couple of years. Since 2023, it rose by around 1,200%, which dwarfs the 680% gains that chipmaker and AI giant Nvidia has amassed during that same stretch. Palantir joined the S&P 500, and it's now part of the even more exclusive Nasdaq-100 index. But if you were to go off of analyst price targets, you'll see that the consensus target today is just $74.79. Palantir flew past that on its way to a high of more than $125 earlier this year. Are analysts just flat out wrong about the stock, and could Palantir still be a good buy after its recent dip in price? Although the consensus analyst price target may seem low, individual analysts have been bumping up their targets for the stock. Six of the 10 most recent price targets for Palantir have been above $100, seeming to imply that many analysts see the stock bouncing back from its recent fall in value; its trading for less than $85 at the time of this writing. Based on that, you might expect to see at least 17% upside for the AI stock right now. As analyst price targets go up, the consensus (which is an average) will also rise. Analysts routinely upgrade their price targets, usually after there is significant news, including an earnings announcement. And that's what happened in early February after Palantir posted its latest earnings numbers, which showed the company's growth rate accelerated yet again. Demand for its AI-powered platform remains robust, as sales for the last three months of 2024 totaled $827.5 million and rose by 36% year over year. In the previous quarter, its year-over-year growth rate was a more modest 30%. Palantir isn't as risky as a meme stock, but there's no doubt that there's a lot of speculation, hype, and excitement pushing its valuation higher these days. Perhaps investors are expecting its growth rate to continue to soar as Palantir reaches new government and commercial customers. But even if you consider its strong growth prospects, it can still be difficult for analysts to find a way to set a reasonable price target for the stock given how significant of a premium investors are paying for it right now. Currently, the stock is trading at around 436 times its trailing profits. To put that into context of how expensive that is, here's a look at other tech companies which trade at 100 times their trailing profits. I've filtered this chart to include only stocks which have market caps in excess of $100 billion. Given how much euphoria seems to be around Palantir, it's incredibly difficult for analysts and investors who rely on any kinds of valuation metrics and multiples to determine where Palantir's stock may go. But one thing is for sure: This is an extremely expensive stock to own. Shares of Palantir have fallen by more than 33% in less than two weeks' time. News of tech giant Microsoft cancelling some AI data center leases may have spooked AI investors. That underscores the danger with Palantir's stock because as quickly as it has rallied, it could give back its gains just as fast. I think analyst price targets are wrong about Palantir, but that's because they still look far too bullish given the results the company has achieved thus far. The stock's recent fall in price shows how volatile it can be since speculation plays such a significant part of its valuation. Unless you have an extremely high risk tolerance, you're likely better off avoiding the stock even with its recent dip in value. There are far better priced AI stocks to buy than Palantir.

Why Palantir Stock Plummeted This Week | The Motley Fool

Palantir (PLTR 0.18%) stock saw another series of big valuation pullbacks this week. The software specialist's share price closed out the period down 15.9% from the previous week's market close, according to data from S&P Global Market Intelligence. Palantir's valuation sank early in the week's trading as investors continued to digest potential macroeconomic risk factors from tariffs and other catalysts. The company's share price then saw another big sell-off on the day of trading following Nvidia's fourth-quarter report. Palantir's stock started this week's trading off with a day of sell-offs as investors reacted to news that the Trump administration plans to go forward with plans to enact new tariffs on Mexico and Canada. Shares also pulled back in conjunction with news that the administration intends to introduce new export restrictions that would prevent certain categories of semiconductors and chip-manufacturing equipment from being sold to China. AI stocks got hit with big sell-offs after Nvidia published its Q4 results on Wednesday. The results were actually better than expected, and nothing immediate in Nvidia's report signaled headwinds for Palantir. However, the artificial intelligence (AI) chip leader highlighted uncertainty surrounding potential chip export restrictions in its earnings call. Investors are already struggling to value growth-dependent AI stocks, and the potential for escalating international tensions surrounding artificial intelligence adds additional risk factors. The overall tech category is relatively new, and questions about business- and industry-specific growth outlooks have been combined with macroeconomic concerns to drive sell-offs in the category. On the heels of its recent pullback, Palantir's stock is now down roughly 32% from its high. Despite some recent big sell-offs, the company is still valued at approximately 152.5 times this year's expected earnings and 52.6 times expected sales.

Is Palantir Losing Out on This Massive Market? | The Motley Fool

Shares of the AI software company, which is best known for its work with government defense and intelligence agencies, have soared by 1,000% in that period, and were up by nearly 1,500% before a recent pullback. The company gained favor with investors and clients largely due to its Artificial Intelligence Platform (AIP), which has enhanced the utility of its technology and driven faster top-line growth. In fact, its revenue growth accelerated every quarter for the last year and a half, and its streak of operating margin expansions is even longer (adjusting for the impact of a stock award in the fourth quarter). Its revenue jumped 36% in the fourth quarter to $828 million, but nearly all of that growth came from the U.S market. Palantir's domestic revenue surged by 52% to $558 million with strong growth in both the commercial and government segments. Palantir got its start assisting U.S. intelligence and defense agencies in their counterterrorism efforts, so it's not surprising that the U.S. government still accounts for roughly 40% of its total revenue. But the company's strength at home has not been translating overseas lately. In Europe, revenue grew just 4% in Q4, and that could be a problem for a stock that's trading at sky-high valuations. On the latest earnings call, CEO Alex Karp noted that growth in Europe was "anemic." The market amounts to about 13% of the company's total revenue, and grew at just 4%. He bemoaned Europe's slower pace of tech adoption, adding: "It does look like the continent of Europe will look to the past as a way of getting to the future, struggles with the idea that all the valuable technology in this area is built in America." Palantir does have a number of major clients in Europe, including the U.K.'s National Health Service (NHS), but the company's sluggish performance in Europe may reflect the reputational risk of dealing with a secretive company known for aiding militaries. It may face additional headwinds from worsening U.S.-European relations, and general macroeconomic challenges in the market. Palantir has faced pushback in Europe on multiple fronts. Activist groups organized to protest against its $420 million contract with the NHS, and France's national security agency reportedly ended its contract with Palantir in 2023, choosing to build its own system instead. Meanwhile, a German court blocked the use of technology like Palantir's because it profiles people who are not accused of any crimes, which is an invasion of their privacy. Karp's complaints seem to indicate that the company doesn't have a strategy in mind for reaccelerating its growth in Europe, but finger-pointing and name-calling seem like poor tactics at a time when trans-Atlantic political relations already seem to be rapidly souring. Most large software companies count on international markets for significant amounts of their revenue. Salesforce booked 67% of fiscal 2024 revenue from the Americas, with 23% coming from Europe, and 10% from the Asia-Pacific region. ServiceNow derived 63% of its revenue from North America in fiscal 2024, with 26% coming from the Europe, Middle East, and Africa region, and 11% from its Asia-Pacific and other regions. Those are the kinds of companies that make up Palantir's peer group now that its market cap has ballooned to more than $200 billion. Finding success in international markets would give Palantir additional revenue streams. Those could become even more valuable if recent proposals for Pentagon budget cuts become reality, and it would also offset some of the concentration risk the company faces due to its overreliance on the U.S. market. In 2024, 66% of the company's revenue came from the U.S., putting it on par with Salesforce and ServiceNow. But given the recent trends, that percentage is likely to skew further toward the U.S., meaning Palantir will have to outperform at home to compensate for weak performances abroad. Investors shouldn't ignore that risk, especially as the stock trades at a lofty price-to-sales ratio of 87. From that valuation, it wouldn't take much bad news to send Palantir stock sliding.