Even after value-driven bulls cashed in on short-term gains following the March tariff dip, I still view Palantir (PLTR) as a solid long-term play. However, its valuation has clearly drifted back into speculative territory. That doesn’t rule out strong future returns—but they now come with higher risk, making the stock less appealing for institutional or risk-averse investors. For now, I remain Neutral on Palantir.
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Valuation Indicators Are Through the Roof
Palantir (PLTR) has recently been swept up in bullish sentiment that seems indifferent to valuation. The company does boast strong recurring revenue growth potential, but there’s a limit to how far a valuation can stretch—at least, in theory.
Palantir’s current price-to-sales ratio sits at an eyebrow-raising 115, compared to the sector average of just 3.5. Meanwhile, its revenue growth is 33.45%, versus the sector’s 6.55%. In other words, the stock is being priced as if triple-digit annual growth is inevitable—an assumption that’s far from guaranteed. Much of the current valuation appears driven more by long-term hype and speculative momentum than by near-term fundamentals.
Technically, Palantir also looks overbought. The 14-week RSI is above 70, signaling overheated conditions, while the 14-day RSI is at 65 and climbing. The daily chart offers a more reasonable view than the weekly, but neither suggests it’s a great time to initiate a large position. Right now, Palantir is priced more like a luxury brand than a typical tech stock—echoing Tesla (TSLA), where fundamentals take a back seat to sentiment and brand power.
That said, if you have the stomach for volatility and a long-term horizon, history suggests that even poor entry points haven’t prevented eventual upside. In the short term, downside risk is elevated—but for believers, the long-term reward may still be worth the ride.
Earnings Are Coming on August 4
Management previously raised guidance to $3.902 billion in revenue, which represents a staggering 36% year-over-year increase. If revenue beats this estimate with 38-39% year-over-year growth, there’s some potential for the stock price to rally further. Management has mastered underpromising and overdelivering, but this is not a reason to buy the stock before earnings. Even a modest beat-and-raise would probably induce downside due to the excessive valuation multiples.
Guidance on Q3 will be crucial to monitor, given the current valuation. One of the most critical threats I see to Palantir’s medium-term revenue visibility right now is any change in government budgets due to fiscal constraints. But in reality, a company like Palantir is most likely to be the beneficiary of redirected capital due to its focus on modernization and efficiency, which are crucial for keeping the U.S. and its allies at the forefront geopolitically.
Investing in a stock before an earnings report is typically a hit-or-miss situation unless there are massive structural tailwinds not accurately priced in by consensus. However, in the case of Palantir, it has now delivered six consecutive quarters of beating consensus estimates and raising guidance.
However, the last beat was relatively minor on a GAAP basis and barely in line on a normalized basis. Therefore, it’s logical that management wants to keep this streak going and is making guidance even more conservative this time around to keep sentiment up by beating expectations again in the coming quarter.
Is Palantir Technologies a Buy, Sell, or Hold?
On Wall Street, Palantir carries a consensus Hold rating based on four Buys, 10 Holds, and three Sells. PLTR’s average stock price target of $109.50 indicates almost 30% downside potential over the next 12 months.
However, I think this is a bit pessimistic, given the investment has consistently significantly outperformed the average price target through 2024 and 2025, when the stock has been experiencing its most heavy bull run.
The stock might be in for a near-term correction, but I find it very unlikely that Palantir stock will reveal a contraction in price 12 months from now. Instead, I forecast at least a 15% annual return from the present, and potentially as high as 25%.
Palantir Is Expensive, but That Doesn’t Matter Here
Palantir (PLTR) won’t appeal to traditional, conservative investors—and that’s perfectly fine. It’s not for them. For those willing to look beyond conventional valuation metrics, the stock offers a unique kind of appeal. It’s expensive, yes—but like a luxury brand, it commands a premium for a reason. I believe Wall Street’s reading this one wrong.
A 20% return over the next year may sound optimistic, but based on sentiment and forward growth potential, I see it as a conservative estimate. That said, with the risk of a near-term correction, I’m staying Neutral for now—though I expect to move back to a Buy rating once the setup improves.