Palantir Technologies (NASDAQ:PLTR) seems to be on an unstoppable trajectory. The company recently crested the $1 billion revenue mark for the first time, and customers from industries far and wide continue to sing the merits of its technological offerings.
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The market was plenty thrilled with the Palantir’s Q2 2025 performance, which surpassed expectations (once more) and raised guidance for the rest of the year (yet again). PLTR’s share price jumped another 8% in the first full day of trading after the quarterly earnings call, reaching another all-time high.
So, is now the time to come on board this AI winner, which is up more than 550% for the past twelve months?
Not according to investor Kenio Fontes, who doesn’t think the risk versus reward calculation favors investors at this juncture.
“Despite operational excellence and promising AI/defense tailwinds, Palantir’s valuation remains stretched, offering virtually no margin of safety,” explains the investor.
That’s not to say that Fontes is down on the company – far from it. In fact, the investor is quick to note that PLTR enjoyed an “incredible” quarter, one that increased the market’s already high confidence in Palantir’s very promising future.
The big issue, according to Fontes, is PLTR’s valuation. The investor emphasizes that all of the fantastic revenues, earnings, and satisfied customers will not necessarily translate into a high IRR for PLTR shareholders going forward. In fact, the opposite might actually be the case.
“If the market cap already prices all of this in, the IRR may be quite low,” adds Fontes.
The investor also cautions that it is not a given that Palantir will be able to keep up its current pace of rapid growth. He points out that the U.S. Department of Defense is looking for alternatives to Palantir, while the company will also need to deal with competition from both large tech companies and more niche firms.
“My rating for PLTR stock remains a sell, even though I like the company and the work it has been doing,” concludes Fontes. (To watch Fontes’ track record, click here)
Wall Street is not quite as downcast as Fontes, though they are not exactly banging down the door either. With 10 Holds – to along with 4 Buys and 2 Sells – PLTR has a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $150.60 has a downside of 13%. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.