Palantir Technologies Is Down 27% From Its All-Time High. Is It Still in a Bubble?

2 weeks ago 5

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Keithen Drury, The Motley Fool

Mon, Mar 24, 2025, 9:15 AM 4 min read

Palantir (NASDAQ: PLTR) banal appeared to beryllium successful a bubble astatine the commencement of the year. Investors' expectations were incredibly high, and the valuation looked inflated. Following the hefty sell-off that deed astir artificial quality (AI) stocks, however, Palantir is down 27% from its all-time high.

Some investors whitethorn spot this diminution arsenic a motion the banal whitethorn beryllium acceptable to roar again. However, adjacent an perfect outlook hints that determination could beryllium much symptom ahead.

Palantir has go 1 of the hottest AI stocks connected Wall Street. Its information analytics bundle has been astir for a agelong clip and was primitively catered to authorities agencies. But successful caller years, Palantir has expanded rapidly into the backstage sector.

While Palantir's basal merchandise is simply a beardown selling point, the biggest deed lately has been its Artificial Intelligence Platform (AIP). AIP allows its users to bash respective things, but exemplary integration and AI agents are the 2 astir noteworthy. By integrating assorted AI models passim an employee's workflow, Palantir's clients tin power what delicate accusation is fed into an AI exemplary alternatively than having each of it shared with a third-party. Additionally, users tin programme AI agents to bash tasks that humans usually would do, freeing them up to bash enactment that requires much archetypal thinking.

AIP has been a immense maturation operator for onboarding caller commercialized clients, but it besides has been a mode to grow authorities clients' spending.

This dual-market attack has fueled Palantir's monolithic maturation arsenic some sectors ramp up their AI spending. Palantir's authorities gross roseate 40% twelvemonth implicit twelvemonth to $455 cardinal successful Q4, portion commercialized gross grew 31% to $372 million. But aft six consecutive quarters of accelerating gross growth, the question remains: Is it enough?

Stocks participate a bubble erstwhile expectations outweigh reality. After Palantir logged a much than 1,800% summation successful conscionable implicit 2 years, this was perfectly the lawsuit arsenic the banal traded for much than 100 times income astatine its peak.

Although the caller sell-off whitethorn look to beryllium an accidental to bargain the banal astatine a discount, shares are inactive acold excessively expensive. To recognize what benignant of maturation a 78 times P/S aggregate conveys, let's exemplary retired the best-case script for Palantir based connected these 3 assumptions:

Revenue maturation accelerates to 40% and stays astatine that level implicit the adjacent 5 years.
Profit margins astir treble from their existent level of 16% to 30%.
Any dilution from stock-based compensation is ignored.

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