TLDR
- Palantir CEO Alex Karp aims to increase company revenue by 10x while cutting headcount by 12%
- Stock dropped 5% Wednesday following an 8% decline Tuesday as tech sell-off intensifies
- Citron Research criticized Palantir’s valuation at nearly 500 times earnings compared to OpenAI’s 17x sales multiple
- Company signed $2.27 billion in new contracts in Q2 2025, up 140% year-over-year
- Palantir leads the AI software platforms market, which is growing at 41% annually and expected to reach $153 billion by 2028
Palantir Technologies stock has experienced dramatic swings this week as investors weigh the company’s ambitious growth targets against mounting concerns about its sky-high valuation. The data analytics giant has delivered exceptional returns since going public in 2020, but recent market turbulence is testing investor confidence.
CEO Alex Karp recently outlined an aggressive expansion plan during a CNBC interview earlier this month. The company aims to increase revenue by 10 times while simultaneously reducing its workforce by 12 percent. This bold strategy reflects Palantir’s confidence in its artificial intelligence capabilities and operational efficiency.
The revenue multiplication target becomes more realistic when examining Palantir’s track record. The company generated $1.1 billion in annual revenue in 2020. By the second quarter of 2025, it produced over $1 billion in a single quarter. The company projects $4.1 billion in revenue for 2025, representing nearly a four-fold increase in five years.
This growth trajectory translates to a compound annual growth rate of 30 percent over the past five years. Achieving a 10x revenue increase from 2025 levels would require reaching approximately $41 billion in annual revenue. Based on current growth patterns, this target appears achievable within the next decade.
Palantir’s market position supports these ambitious projections. The company ranks as the leading vendor in the AI software platforms market according to multiple third-party research firms. This market segment is expanding rapidly, with IDC forecasting 41 percent annual growth and total market size reaching $153 billion by 2028.
Strong Contract Performance Drives Optimism
The company’s recent contract wins demonstrate robust demand for its services. Palantir secured $2.27 billion worth of new contracts in the second quarter of 2025. This figure jumped 140 percent compared to the same period last year and exceeded the company’s quarterly revenue.
Revenue growth has accelerated as Palantir expanded its commercial AI offerings. The company posted 48 percent year-over-year revenue growth in the second quarter. This acceleration began roughly two years ago when Palantir launched AI solutions specifically designed for commercial customers.
Operating margins have improved alongside revenue growth. Palantir’s operating margin increased by eight percentage points in the first half of 2025. This improvement stems from expanding customer base and increased spending by existing clients.
Analysts project earnings per share will spike 58 percent in 2025 to $0.65. The company’s strong unit economics suggest bottom-line growth could outpace revenue increases as the business scales.
Valuation Concerns Trigger Stock Decline
Despite strong fundamentals, Palantir stock faced severe pressure this week. Shares dropped 5 percent Wednesday following a nearly 8 percent decline Tuesday. The broader tech sell-off contributed to the decline, with the S&P 500 falling 0.5 percent and Nasdaq losing 1.2 percent.
Valuation concerns intensified after Citron Research published a critical analysis of Palantir’s stock price. The short-selling firm highlighted the stark contrast between Palantir’s valuation and that of OpenAI following the latter’s recent funding round.
Citron noted that OpenAI trades at approximately 17 times sales after its latest valuation. Palantir currently trades at nearly 500 times earnings and carries a price-to-sales multiple seven times higher than OpenAI. This comparison raises questions about Palantir’s current market pricing relative to other AI leaders.
The valuation disconnect becomes more pronounced when considering growth rates. While Palantir shows strong expansion, OpenAI represents the epicenter of the current AI revolution with potentially higher growth prospects.
Economic uncertainty has amplified concerns about richly valued tech stocks. Recent jobs data indicating economic slowdown prompted investors to rotate away from high-multiple technology companies. Palantir’s premium valuation makes it particularly vulnerable during such market conditions.
The stock’s astronomical rise since 2020 has created substantial gains for early investors. A $100 investment at the company’s public debut would now be worth $1,660. However, this remarkable performance has pushed the stock to levels that may be difficult to sustain without continued exceptional execution.
Palantir’s second-quarter results showed the company generated just over $1 billion in quarterly revenue, with projections pointing toward $4.1 billion for the full year 2025.
