Palantir stock down 30% from record high as analysts see potential rebound

Palantir Technologies’ stock delivered triple-digit returns in 2023, 2024 and 2025, but its momentum has stalled in 2026. The shares are down 30% from their record high as investors rotated out of richly valued equities amid macroeconomic uncertainty.

Despite the pullback, most Wall Street analysts argue Palantir is undervalued. The median target price of $200 implies 36% upside from the current share price of $146. Dan Ives at Wedbush Securities also suggested Palantir could become a trillion-dollar company by 2028, a view that implies 185% upside from a stated market value of $350 billion.

Bull case: Palantir is building an AI decisioning platform

Palantir began with data integration and analytics software for government agencies in the defense and intelligence sectors. The company has since adapted its platform for commercial industries and introduced an adjacent AI offering called AIP.

AIP is described as an orchestration tool for large language model (LLM) development, enabling developers to build generative AI features into applications and business processes. Dan Ives characterized AIP as a “gold standard” for AI use cases, and Forrester Research ranked Palantir as a leader in AI decisioning platforms.

Recent results and operating metrics

In its fourth-quarter report, Palantir highlighted several growth and profitability measures. Customer count increased 26%, and net revenue retention reached 39%, described as the ninth straight acceleration. Sales rose 70% to $1.4 billion, marking the 10th consecutive acceleration. Adjusted earnings increased 79% to $0.25 per diluted share, and the company posted a Rule of 40 score of 127.

Morgan Stanley analyst Sanjit Singh said Palantir is emerging as a standard in enterprise AI, adding that it is delivering both strong growth in public software and strong profitability.

Mark Gibbens, chief investment officer at Gibbens Capital Management, told Charles Schwab that Palantir is “somewhat insulated” from concerns about AI disrupting the software industry because it does not develop LLMs itself, but instead helps customers integrate LLMs into operations.

Market outlook

Grand View Research estimates AI platform spending will grow 38% annually through 2033, supported by adoption in healthcare, finance, manufacturing and retail. The article argues Palantir’s revenue growth could align with that pace.

Bear case: valuation remains the key risk

The central concern highlighted in the article is valuation. CEO Alex Karp has dismissed worries about Palantir’s rich valuation, saying analysts expressing skepticism have effectively “robbed potential shareholders of a windfall.” The article counters that investors who adopt a buy-at-any-price approach often face losses later.

Palantir’s price-to-sales (P/S) ratio reached 137 in August 2025, placing it among the most expensive software stocks on record. The article notes that only seven other software companies have traded above 100 times sales, and that all of them declined at least 70% after reaching peak valuation. Palantir is described as the sole exception so far, though the stock is down 20% since August 2025 and could fall further.

At the time of writing, Palantir trades at 78 times sales, which the article characterizes as cheaper than its prior levels. However, it also states Palantir remains the most expensive stock in the S&P 500 by a wide margin, with Texas Pacific Land the closest contender at 38 times sales.

Because of that valuation gap, the article concludes that Palantir is vulnerable to a substantial drawdown if growth slows, recommending that investors keep any positions relatively small.