Palantir (NASDAQ:PLTR) has set demanding expectations for itself, and in recent quarters, it has managed to beat them. That’s important because the upbeat tone from CEO Alex Karp isn’t just bravado; it’s backed by hard numbers.
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The company’s AI-driven offerings, especially its Artificial Intelligence Platform (AIP), have helped fuel robust adoption and growth, with Q4:25 revenue climbing about 70% year-over-year and U.S. commercial sales surging 137%, as enterprises increasingly deploy AI analytics and automation at scale. The momentum pushed full-year 2025 revenue up and led Palantir to issue bullish 2026 guidance, implying continued ~60% growth.
But the stronger the growth, the higher the bar becomes. With a market cap north of $300 billion – even after a 25% pullback this year – the stock still reflects expectations for sustained hypergrowth. At this valuation, even a modest deceleration could meaningfully alter the investment thesis.
That sensitivity to slowing momentum is exactly what concerns one top investor known as Stone Fox Capital. He argues that the very AI wave fueling Palantir’s ascent could eventually work against it.
“The real risk is that investors see the threat of Claude Code allowing companies to build Palantir-type AI solutions internally,” states Stone Fox, who is among the top 4% of stock pros covered by TipRanks.
In a somewhat ironic twist, the investor explains that this is “AI disrupting AI.” Palantir’s winning sales pitch to clients has been its ability to create bespoke AI solutions that improve various aspects of their business operations.
However, what if other AI options – such as Anthropic’s recently-launched Claude Code – can replace Palantir’s AIP? That would be a difficult pill to swallow.
“Suddenly, Palantir isn’t the premier AI company and faces some legitimate threats of their technology being supplanted by the LLMs from Anthropic,” cautions Stone Fox.
In addition, Stone Fox isn’t totally convinced by Palantir’s Rule of 40 score. Calling the 127% figure “so misleading,” the investor points out that the company’s margins don’t take into account stock-based compensation.
As mentioned above, one of the biggest issues with Palantir for many investors, including Stone Fox, has been its “extreme valuations” over the course of its massive bull run. The investor adds that eventually PLTR’s forward sales multiple will eventually decrease, just like “all of the greatest enterprise software stocks.”
And that leaves PLTR’s share price with just one way to go: downward.
“The stock is likely to continue re-rating as investors price in the risk that revenue growth doesn’t occur in perpetuity due to AI threats,” concludes Stone Fox, who rates PLTR a Strong Sell. (To watch Stone Fox Capital’s track record, click here)
Wall Street, on the other hand, is feeling a bit better regarding which direction the winds are blowing. With 11 Buys, 6 Holds, and 2 Sells, PLTR enjoys a Moderate Buy consensus rating. Its 12-month average price target of $191.25 points to gains of ~44% in the year ahead. (See PLTR stock forecast)
Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.