.
CEO of Palantir Technologies Alex Karp attends the Pennsylvania Energy and Innovation Summit at Carnegie Mellon University in Pittsburgh, Pennsylvania, U.S., July 15, 2025.
November proved to be a rough month for Palantir. The software analytics firm saw its shares tumble 16%, marking its steepest decline since August 2023. The slide came as investors broadly shed AI‑related stocks over concerns that valuations had become stretched beyond fundamentals.
Palantir began the month on a high note, beating Wall Street expectations for third‑quarter earnings and revenue. The Denver‑based company posted its second consecutive $1 billion‑revenue quarter, a milestone that underscored the growing adoption of its data‑integration platforms across government and commercial customers. Yet the post‑earnings rally was short‑lived.
Analysts from several major houses flagged the stock’s pricing as “extreme.” Jefferies warned that investors could find a more favorable risk‑reward profile in larger AI players such as Microsoft and Snowflake. RBC Capital Markets raised concerns about Palantir’s increasingly concentrated growth trajectory, while Deutsche Bank described the valuation as “very difficult to wrap our heads around.”
The sell‑off intensified after famed investor Michael Burry publicly disclosed a short position against Palantir and AI chip leader Nvidia. Burry, known for predicting the 2008 housing crisis, has also accused hyperscale cloud providers of inflating earnings to sustain soaring valuations.
Palantir’s chief executive, Alex Karp, responded forcefully on CNBC’s “Squawk Box,” calling Burry’s actions “market manipulation” and “egregious.” Karp argued that short‑selling a company whose core business revolves around data ontology and AI infrastructure is “bats‑crazy.”
Recent Deal Wins and Their Strategic Implications
Despite the market turbulence, Palantir secured two notable contracts in November. The firm inked a multi‑year, multi‑million‑pound agreement with PwC to accelerate AI adoption for UK enterprises. In parallel, Palantir partnered with FTAI Aviation, a leading aircraft‑engine maintenance provider, to modernize predictive‑maintenance workflows using its Foundry platform.
Both deals signal Palantir’s continued penetration into high‑margin, regulated sectors where data security and real‑time analytics are paramount. However, the contracts alone have not alleviated investor worries about the company’s valuation relative to its growth outlook.
Valuation Context Across the AI Landscape
Palantir now trades at roughly 233 times forward earnings, a multiple that dwarfs peers such as Nvidia (≈ 38x) and Alphabet (≈ 30x). The stark disparity highlights the market’s skepticism that Palantir can sustain its rapid revenue expansion without diluting margins.
Broadly, AI‑centric stocks have faced pressure this month. Nvidia fell more than 12%, while Microsoft and Amazon each slipped around 5%. Quantum‑computing names like Rigetti Computing and D‑Wave Quantum lost over a third of their market value. Only Apple and Alphabet managed modest gains, underscoring a sector‑wide rotation away from speculative pricing.
Financial Outlook and Strategic Risks
Palantir’s FY 2025 guidance projects revenue growth of 53% year‑over‑year, with U.S. commercial revenue expected to climb 121% YoY. The company attributes the upside to expanding contracts in defense, health‑care, and energy – verticals where data sovereignty and compliance drive premium pricing.
Key risks remain:
- Concentration Risk: A significant portion of revenue is tied to a handful of large government contracts, exposing the company to policy shifts and budgetary constraints.
- Margin Pressure: Scaling the Foundry platform across heterogeneous environments demands substantial engineering spend, potentially eroding operating margins.
- Competitive Landscape: Cloud giants such as Microsoft, Amazon, and Google continue to integrate AI capabilities directly into their platforms, offering customers bundled services that could undercut Palantir’s value proposition.
- Valuation Gap: The wide earnings multiple premium requires sustained top‑line acceleration; any slowdown could trigger sharper price corrections.
Management’s Narrative
In a shareholder letter, Karp emphasized that Palantir’s technology is “making venture‑grade returns accessible to everyday investors,” positioning the firm as a conduit for broader participation in AI‑driven innovation. During the earnings call, Karp urged skeptics to “turn on the conventional television” and watch the company’s progress, a rhetorical flourish that underscored his confidence in Palantir’s long‑term trajectory.
Palantir declined to comment for this story.
Original article, Author: Tobias. If you wish to reprint this article, please indicate the source:https://aicnbc.com/13743.html
