Palantir Technologies (PLTR) has been one of the biggest winners of the AI rally. It surged 340% in 2024 and is up nearly 150% year to date. But with its sky-high valuation, investors are questioning how much higher the stock can go.
Palantir stock hit a new all-time high on November 3, closing at $207.18. That was after the AI software company reported another strong quarter.
Palantir reported $1.18 billion in revenue, up 63% from a year earlier, with U.S. commercial sales jumping 121% to $397 million. Adjusted earnings came in at 21 cents a share, beating analysts’ estimate of 17 cents.
Palantir’s momentum has been fueled in part by demand from the U.S. government, especially military agencies. The company recently secured a deal worth up to $10 billion contract with the U.S. Army.
The company raised its full-year outlook again as demand continues to scale.
Despite the earnings beat, Palantir’s shares dropped almost 8% on November 4, weighed down by its elevated valuation and news of a well-known short investor targeting the name.
Palantir’s short seller sees AI bubble
Michael Burry, known for his successful bets against the U.S. housing market in 2008, has now placed bearish bets on Palantir, according to a November 3 filing.
Late last month, Burry warned of a bubble in an X post, fanning investor concerns over inflated spending in the AI and tech industry, Reuters reported.
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Palantir’s CEO Alex Karp has spoken against Burry’s short selling, including shorting Nvidia.
“The two companies he’s shorting are the ones making all the money, which is super weird,” Karp said in a CNBC interview.“He’s actually putting a short on AI. … It was us and Nvidia.”
Analysts, meanwhile, continue to diverge.
Analysts mixed on Palantir stock
Bank of America raised the firm’s price target for Palantir to $255 from $215, reiterating a buy rating, according to a research note published on November 4.
“We anticipate the acceleration will continue as Palantir benefits from a larger network effect of its customers. Along with the revenue expansion from the growing user base, we see significant margin growth,” the analysts wrote, calling Palantir “the best-in-class AI enabler, integrator, architect, and developer across peers.”
Related: Bank of America sounds alarm on Tesla’s problem
RBC Capital, meanwhile, sounds the alarm on Palantir’s U.S.-centric business structure.
RBC raised its price target on Palantir to $50 from $45 but kept an underperform rating, noting that while the company delivered a strong quarter, its momentum remains “overwhelmingly U.S.-centric,” Thefly reported.
The analysts said Palantir’s international growth is stagnant, and bookings are still dominated by multi-year U.S. commercial AI contracts that may be pulling forward demand.
“Profitability remains strong, but there is limited visibility into normalized growth once these early AIP – Artificial Intelligence Platform – deployments mature,” the firm added.
Palantir stock closed at $187.90 on November 5.
