Palantir (NASDAQ:PLTR) has had a wild couple of weeks. The stock kicked off last week with a nearly 8% jump, only to see those gains fade as the broader market pulled back. That volatility comes on the heels of the company’s early-November Q3 report, which delivered a solid beat-and-raise but still sent the shares sliding as investors balked at the valuation. All told, PLTR remains ~16% below its pre-earnings levels.
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Most of the Street remains wary of Palantir’s lofty valuation, even as they acknowledge the company’s expanding commercial traction and long-term AI opportunity. Freedom Broker analyst Almas Almaganbetov, however, takes a more bearish stance, arguing that those positives don’t offset what he sees as a 2026 outlook growing increasingly risky.
For one, Almaganbetov believes Palantir is facing “slower growth from a high base,” a concern that becomes more pronounced given the stock’s steep F2026 price-to-earnings ratio of 301x. At such elevated multiples, even a mild deceleration could trigger a “sharp market re-rating,” especially with the 121% year-over-year jump in U.S. Commercial revenue in 2025 setting up an exceptionally tough comparison.
“Replicating that growth in 2026 would require incremental revenue of over $480 million,” Almaganbetov explained. That kind of increase would demand “aggressive expansion across the entire U.S. market.”
Secondly, the company’s dependence on government business remains a key vulnerability, with about 54% of total revenue coming from public-sector contracts. Under a Trump administration, programs like DOGE and the possibility of an 8% annual cut to the defense budget could “create headwinds for growth.”
Meanwhile, international performance also continues to disappoint. Roughly 75% of revenue still comes from the U.S., and the company’s ongoing difficulty expanding overseas limits its ability to diversify.
Personnel expenses are another growing challenge. With the average U.S. salary for an AI engineer now around $175,000, scaling the business would require hiring thousands more engineers. That level of wage inflation could bring the operating margin down from 51% to 45–48% by the end of next year.
Lastly, the company is also exposed to concentration risk, as a large share of its revenue still comes from a small number of major contracts. Any delay, restructuring, or cancellation of these agreements would pose a meaningful threat to its financial performance.
“The company’s currently elevated valuation suggests that the market has already priced in not only Palantir’s strong present momentum but also a prolonged period of hypergrowth, which is inherently unsustainable,” the analyst summed up.
As such, Almaganbetov assigns PLTR shares a Sell rating, although his price target does go from $125 to $170, suggesting the stock will stay rangebound for the time being. (To view Almaganbetov’s track record, click here)
Turning now to the general Street view, PLTR claims a Hold (i.e., Neutral) consensus rating, based on a mix of 11 Holds, 3 Buys and 2 Sells. At $187.87, the average price target implies the shares will gain ~8% in the months ahead. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.