PLTR: Palantir Technologies Inc.’s Meteoric Run Meets a Reality Check
PLTR has been on an incredible run, surging over 70% in 2025 alone and defying broader tech sector woes [4]. Yet as Palantir Technologies nears its zenith, valuation metrics suggest little room for further ascent-and substantial downside risk looms.
The Meteoric Ascent
Palantir Technologies (ticker: PLTR) began 2025 with broad momentum. By early June, shares traded near $132, up from roughly $75 at the start of the year-a gain exceeding 75% [4]. Bolstered by a $30 million U.S. Immigration and Customs Enforcement contract and deep government ties, PLTR's stock has moved like a rocket fueled by defense spending and AI hype.
In simple terms, Palantir's growth resembles a loan compounding at a high interest rate: if you start at 100 and earn 20% monthly, you quickly hit 579 in value. Likewise, PLTR's price trajectory feels exponential-until it doesn't.
A Valuation Too Rich for Comfort
Investors traditionally gauge "richness" through price-to-earnings (P/E) and price-to-sales (P/S) ratios. As of June 3, 2025, PLTR's trailing P/E stands at 579-over five times the typical "overvalued" threshold and vastly higher than most tech peers [1]. Even its forward P/E sits near 208, implying the market expects unprecedented earnings growth simply to justify today's share price [1].
Similarly, PLTR's P/S ratio hovers around 102, compared to roughly 3 for the S&P 500 [2][5]. Put plainly, you're paying $102 for every $1 of Palantir revenue versus $3 for every $1 in the broader market. That gap mirrors buying a Tesla at $10,000 today hoping it's worth $50,000 tomorrow-an outcome possible but implausible.
Trivariate Research, for instance, likens Palantir's valuation to past tech and biotech bubbles, noting few firms trading above 30 times forecast sales avoid steep downturns [3]. When multiples diverge from fundamental growth-here, PLTR's 36% revenue increase in Q4 2024 [6]-the risk of a valuation collapse increases.
Government Contracts vs. Commercial Growth
Palantir Technologies built its reputation as a government contractor, supplying intelligence and defense agencies. In Q1 2025, over 42% of revenue derived from U.S. government work [4]. While this base offers stability, it caps upside: government budgets tighten, and political shifts can cut contracts.
Meanwhile, Palantir's commercial arm grew 31% year-over-year last quarter [6], but international sales declined 5% [4]. If domestic defense contracts falter or international expansion stalls, PLTR's lofty valuation lacks a sustainable revenue runway.
Too Late to Chase the Momentum?
Investors who bought PLTR at $25 in late 2022 have ridden a nearly 400% gain [6]. Chasing the last leg of a rally often yields marginal returns. With an average analyst price target below current levels-$44.87 as of early 2025-many see limited upside or even downside [6].
In simple math: paying $579 today for $1 of last year's earnings means even doubling net income does little to justify the sticker price. It's like betting on a coin toss with the worst odds-possible, but folly for most.
Conclusion
Palantir Technologies' journey from covert analytics startup to a market darling is undeniable. Yet every rocket must reenter Earth's atmosphere. When P/E and P/S soar to extremes, risk outweighs reward. For now, PLTR's chart resembles a peak far steeper than its base can sustain. Caution, not exuberance, should guide investors eyeing the final frontier of this climb.
Disclaimer:
All views expressed are my own and are provided solely for informational and educational purposes. This is not investment, legal, tax, or accounting advice, nor a recommendation to buy or sell any security. While I aim for accuracy, I cannot guarantee completeness or timeliness of information. The strategies and securities discussed may not suit every investor; past performance does not predict future results, and all investments carry risk, including loss of principal.
I may hold, or have held, positions in any mentioned securities. I receive no compensation for this content and do not intend to influence market prices. Opinions herein are subject to change without notice. This material reflects my personal views and does not represent those of any employer or affiliated organization. Please conduct your own research and consult a licensed professional before making any investment decisions.
Bullish outlook.
Tags: PLTR, PLTR 0.00%↑
References
"Palantir Technologies (PLTR) PE Ratio" FinanceCharts.com. Retrieved June 3, 2025. https://www.financecharts.com/stocks/PLTR/value/pe-ratio
"Palantir Technologies (PLTR) PS Ratio" FinanceCharts.com. Retrieved June 3, 2025. https://www.financecharts.com/stocks/PLTR/value/ps-ratio
John Leahy, "Palantir is one of the most expensive U.S. large-cap stocks ever" Financial Times, June 5, 2025. https://www.ft.com/content/747dd085-6c83-4c0b-a93e-e134a643f2dd
Uday Vedam, "Palantir defies tech gloom as Trump momentum powers stellar share gains" Reuters, June 3, 2025. https://www.reuters.com/business/palantir-defies-tech-gloom-trump-momentum-powers-stellar-share-gains-2025-06-03/
John Dobosz, "New Contracts To Drive Palantir Stock?" Forbes, June 3, 2025. https://www.forbes.com/sites/greatspeculations/2025/06/03/new-contracts-to-drive-palantir-stock/
Lori Calvasina, "Palantir Stock Is Off the Charts. Why It's Time to Sell." Barron's, February 2025. https://www.barrons.com/articles/palantir-stock-price-buy-sell-c6a2cd10Thanks for reading! Subscribe for free to receive new posts and support my work.