Financial Clash: Is Palantir Escaping a Prolonged Bear Market?
Palantir Technologies, the enterprise software company known for its AI and data analytics solutions, has been making headlines lately due to its soaring stock price and mixed analyst opinions.
Despite the accelerating growth, cash generation, and product innovation that analyst Nauman Khan of MKM Partners sees in Palantir, there are concerns about the company's valuation. Pythia Research notes that Palantir trades at a forward EV/Sales of nearly 100x and forward EV/EBITDA of 216x, making it one of the most expensive tech stocks on the market.
Daniel Jones of Crude Value Insights shares similar sentiments, stating that Palantir's valuation is unattractive even under aggressive growth scenarios. According to Jones, despite robust operational performance, the high multiples could pose a significant risk if the macro environment worsens, potentially leading to another share price collapse.
Analysts from Bears of Wall Street argue that Palantir's shares might be in bubble territory, with the margin of safety for holding them practically non-existent. This sentiment was echoed by Bashar Issa, who believes Palantir's valuation is extremely stretched and sees PLTR stock as vulnerable to a correction.
However, not all analysts are bearish on Palantir. Seeking Alpha analyst Rick Orford believes that despite a recent dip, Palantir's fundamentals remain strong. Oakoff Investments, on the other hand, believes the risk/reward for new buyers of Palantir is terrible, but for those who already hold the stock, the potential for future growth may outweigh the current concerns.
The concerns about Palantir's valuation are not without basis. The company's shares have risen nearly 400% from their year-ago levels, and during its recent slide, Palantir lost more than $73B in market capitalization. In Q2 '25, the company reported a 48% year-over-year increase in revenue, marking the first time Palantir surpassed $1 billion in quarterly revenue.
Despite the concerns, Palantir's business performance is strong. The company has secured record contract values, raised its guidance, and received a 94% score from Beyond the Wall Investing. The stock fell approximately 17% from its peak on Aug. 12 and another 10% this week.
As we look ahead, analysts are keeping a close eye on Palantir's Q3 revenue, the CFO's 91 full year Rule of 40 target, and the timing of Army EA bookings under the $10B agreement. Deep Value Investing is particularly interested in these factors, as they could provide insight into whether Palantir is approaching fair value or if the significant downside risk at current prices remains.
While the debate over Palantir's valuation continues, one thing is clear: the company's performance and future prospects are a hot topic among analysts and investors alike. As always, it's essential to conduct thorough research and consider multiple perspectives before making investment decisions.
