TLDR
- Palantir stock fell 9% Tuesday, continuing a five-day losing streak from record highs
- Shares have dropped over 15% in five trading sessions after touching all-time highs earlier this month
- The company reported its first $1 billion revenue quarter with 48% year-over-year growth in Q2 2025
- Stock trades at extreme valuations with forward P/E ratio above 245 times
- CEO Alex Karp continues bullish outlook, comparing market skeptics to being “defanged and bent into submission”
Palantir stock took another hit Tuesday, falling 9% as the artificial intelligence software provider continued its retreat from record highs. The drop marked the fifth consecutive trading day of losses for the company.
Shares have now declined more than 15% over the past five trading sessions. The selloff comes after a strong earnings report earlier this month pushed the stock to all-time highs near $180.
Tuesday’s decline brought the stock to close around $157. Pre-market trading Wednesday showed continued weakness, with bids struggling to maintain the $156-$157 support zone.
The recent correction follows what analysts describe as profit-taking after the stock’s meteoric rise. Palantir remains the top gainer in the S&P 500 for 2025, with shares more than doubling year-to-date.
The company’s latest earnings report showed impressive growth metrics. Second quarter revenues hit $1.004 billion, up 48% year-over-year and ahead of consensus estimates of $940 million.
This marked Palantir’s first-ever $1 billion revenue quarter. The performance was driven by strong results in both commercial and government segments.
Strong Fundamentals Mask Valuation Concerns
US commercial revenue jumped 93% to $306 million in the quarter. Government revenue increased 53% to $426 million, reflecting continued demand for the company’s AI solutions.
The company’s “rule of 40” score reached 94 in the latest quarter. This metric combines revenue growth and profit margin, with scores above 40 considered strong in the software industry.
Despite the strong financial performance, valuation concerns persist. The stock currently trades at a forward price-to-earnings ratio exceeding 245 times.
For comparison, tech giants Microsoft and Apple carry P/E ratios near 30 times. Meta and Alphabet trade in the 20s range while generating much higher quarterly revenues.
Technical Levels and Market Sentiment
From a technical perspective, the stock is testing key support levels. The $156 level represents a crucial pivot point for near-term direction.
A break below $156 could open the door to further declines toward $155 and potentially $148. Deeper selling might target the $125 level where previous consolidation occurred.
On the upside, bulls need to reclaim $166 to reassert momentum. A move above that level could target $175 resistance.
CEO Alex Karp remains confident about the company’s prospects. In the Q2 shareholder letter, he stated the company aims to become “the dominant software company of the future.”
Karp noted that market skeptics have been “defanged and bent into a kind of submission” as the company’s growth accelerated. He sees no reason to pause the company’s aggressive expansion.
Several analysts have raised price targets following the earnings beat. Wedbush increased its target to $200 from $160, while Bank of America Securities lifted its target to $180 from $150.
The selling pressure appears more technical than fundamental. Trading volume suggests controlled profit-taking rather than panic selling.
Buyers have shown interest at lower levels, though momentum has clearly shifted. The market wants to see continued execution rather than just growth projections.
Pre-market trading Wednesday showed the stock around $155.89, testing the lower end of the key support zone.
