Palantir has enjoyed a phenomenal 150% run this year, fueled by enthusiasm around its Artificial Intelligence Platform (AIP) and rapidly growing commercial business. After delivering impressive quarterly results, PLTR stock briefly fell 16% from its 52-week-intraday high, following contrarian investor Michael Burry’s disclosed short position – but has since recovered and currently trades about 10% below that peak.
AIP has become a central pillar of Palantir’s growth story. An enterprise-grade AI platform built for large, complex organizations like healthcare systems, defense manufacturers, major banks, and government agencies like the U.S. Army – AIP aims to tackle critical, large-scale operational challenges.
Palantir’s Q3 numbers were undeniably strong. Total revenue rose 63% year-on-year to $1.18 billion from $725.5 million, surpassing $1 billion for the second straight quarter. Net income more than tripled to $475.6 million, or 18 cents per share, from year-ago $143.5 million, or 6 cents per share. Palantir also announced partnerships with Snowflake, Lumen and Nvidia.
From defense intelligence to supply chain optimization, the company is executing well, proving that its AI capabilities are not just hype. In a market inundated with AI promises, Palantir is one of the few firms actually delivering measurable results.
And yet, the PLTR stock does not look like a buy at current levels. Here’s why…
At around 103x its projected 2025 sales, Palantir’s valuation feels divorced from reality. For perspective, Microsoft trades at roughly 12x forward sales, Meta at 8x, and even the volatile Tesla, at around 15x. So, it’s not just excellence but near-perfection that is priced into Palantir’s multiple.
That’s a lofty expectation for any company, let alone one whose core business still leans heavily on government contracts. Historically, Palantir’s core business has come from its government contracts. In recent times the commercial segment has been growing rapidly and closing the gap. In the third quarter of 2025, Palantir’s U.S. government revenues grew 52% year-on-year to $486 million., while U.S. commercial revenue grew 121% to $397 million. Total contract value for closed U.S. commercial deals more than quadrupled to $1.31 billion. Yet, the government business still represents more than half of Palantir’s revenues, tying the company’s outlook to public-sector budgets and political cycles.
If the famed intemperance of the current administration adds volatility, compounding it is Founder-CEO Alex Karp’s unfiltered commentary that makes that risk even harder to ignore. In a letter to shareholders, Karp noted, “Some of our detractors have been left in a kind of deranged and self-destructive befuddlement,” adding, “The reality is that Palantir has made it possible for retail investors to achieve rates of return previously limited to the most successful venture capitalists in Palo Alto. And we have done so through authentic and substantive growth.”
His boast — “Please turn on the conventional television and see how unhappy those that didn’t invest in us are. Get some popcorn. They’re crying.” — might excite retail investors, but it also underscores the volatility of personality-driven leadership.
There is a good chance that Karp’s comfort with political theatrics could one day backfire. His alignment with the current administration, while lucrative now, could sour if tables are turned. Sentiment can shift really fast when politics and business blur — Tesla’s relationship with Washington serves as a reminder. In that sense, Karp’s sharp voice — often his greatest advantage – could just as easily become a liability to Palantir’s moat.
Investors should also take note of Michael Burry’s short position in Palantir. While Burry’s calls aren’t infallible, these do tend to flag moments of excessive optimism, which fits the current sentiment around Palantir perfectly. That doesn’t diminish what Palantir has achieved. Its AIP platform is genuinely transformative, and the company is performing well across multiple fronts.
Palantir’s data integration tools, while powerful, have drawn scrutiny from privacy and civil liberties advocates who argue that such systems could be used in ways that stretch the limits of lawful surveillance. In a Palantir-enabled framework, patterns identified by proprietary algorithms can sometimes trigger investigations without the kind of concrete, evidence-based justification traditional law enforcement requires. That dynamic introduces potential legal and ethical overhangs — factors investors should weigh alongside Palantir’s technological strengths.
Even a stellar performance and raised outlook do not justify valuations that stretch beyond reason. So while euphoria cheerleads the buy-the-dip bandwagon and hails Palantir as the next AI giant, staying on the sidelines may be a prudent move because investing isn’t about joining the loudest throng. It’s about paying the right price for the right story. And at more than 100x sales, Palantir’s narrative feels too expensive right now.
Please note that I am not a registered investment advisor and readers should do their own due diligence before investing in this or any other stock. I am not responsible for the investment decisions made by individuals after reading this article. Readers are asked not to rely on the opinions and analysis expressed in the article and encouraged to do their own research before investing.