Shares of Palantir Technologies (PLTR) are facing renewed selling pressure. The stock dropped over 5% over the last five trading days. Since reporting its Q3 results, PLTR has fallen more than 15%. Despite a strong quarterly performance, investors have sold shares to take profits and weigh concerns over the company’s high valuation.
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What’s Behind the Recent Sell-Off?
Palantir’s stock was also hit last week amid a broader tech sell-off. Following a strong AI-driven rally, investors are now concerned that tech stocks may be overvalued. Adding to the pressure, uncertainty over whether the Fed will cut rates in December is weighing on investor sentiment.
At the same time, the idea that companies can easily fund huge data center investments and quickly turn a profit is under scrutiny. Notably, Palantir CEO Alex Karp told Yahoo Finance’s Invest event that much of today’s AI market may not justify the huge amounts of money being spent.
Additionally, economic uncertainty lingers as government agencies recover from the shutdown, delaying a clear picture of the job market, even amid early signs of layoffs.
Why Are Palantir’s Investors Worried?
Palantir investors are worried mainly because the stock is seen as overvalued, despite solid quarterly results. After Q3 results, PLTR stock dropped as high expectations and a premium valuation left little room for disappointment. Profit-taking after recent gains, reliance on government contracts, and concerns about whether the company can sustain long-term growth have also added to the selling pressure.
The sell-off was intensified when renowned investor Michael Burry disclosed a bearish bet against Palantir. Nonetheless, Karp dismissed the short bet as “crazy.” Meanwhile, Wedbush five-star-rated analyst Dan Ives believes Burry is wrong and sees further upside for Palantir despite its high valuation.
What Lies Ahead for Investors?
Despite the recent pullback, PLTR shares are still up more than 160% in the last year, driven by strong demand for AI solutions and lucrative government contracts. The company’s flagship AI-driven software platform, Gotham, is used by the U.S. government and its allies to plan and manage military operations, with no direct replacement available.
Looking ahead, Palantir raised its revenue guidance to $4.396–$4.40 billion for 2025, higher than analysts’ forecast of $4.16 billion. The company also expects U.S. commercial revenue to post year-over-year growth of at least 104%. These strong projections underscore Palantir’s robust growth momentum and support a bullish outlook for the stock.
On the flip side, its high valuation could lead to stock volatility. The stock’s current P/E ratio stands at 430.7, far above the sector average of 31, signaling elevated expectations from investors.
Is PLTR a Good Stock to Buy Now?
According to TipRanks consensus, PLTR stock has a Hold rating, based on three Buys, 11 Holds, and two Sells assigned in the last three months. The average Palantir share price target is $187.87, which implies an upside of 8% from current levels.
