Palantir Still Expensive despite Market Correction
Palantir Technologies, a prominent AI stock highlights a bearish signal amid high selling pressure in the Nasdaq-listed stock lately. The company’s stock price has declined by more than a third since the start of this quarter.
The primary concern with Palantir lies in its overly inflated valuation, the tech firm’s market valuation soared beyond $230 billion, only to retreat to approximately $200 billion, still considered highly overvalued.
Its forward PE ratio of 147 exceeds the S&P 500 index average of 22 despite Palantir Technology’s flourishing business and other successful companies within the index.
Although Palantir continues to expand, with analysts predicting a 37% revenue increase in Q1 and 32% in 2025, justifying this valuation remains challenging. Moreover, indications suggest that the stock may have entered the distribution phase.
The company’s assistance to Ukrainian armed forces in their efforts to target Russian troops during the conflict in Ukraine may be the best example.
Palantir may suffer from the Trump administration’s ant-hawk policies. The Trump administration’s desire to end this war as soon as possible may cause Palantir’s services to plummet.
Additionally, Palantir may encounter more difficulties in the US, where it generates most of its revenue (roughly 67 percent). For the next five years, the Pentagon has committed to reducing its budget by 8% annually, or $50 billion annually, under Defense Secretary Pete Hegseth. Additionally, this might make it harder for the business to get contracts.
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