Here’s Why Palantir Is Winning Everywhere, Except in the Stock Market
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Palantir (PLTR) posted 70% year-over-year revenue growth in Q4 2025 and beat earnings estimates by 8.7%, yet the stock has declined from its peak.
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Palantir trades at extreme valuations of 180x free cash flow and 234x earnings that have priced in multiple years of execution upfront.
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Palantir (NASDAQ:PLTR) had an exceptional run in the past three years, but the music is getting quieter the same way it got louder. PLTR stock has declined by over 28% from its peak in late 2025. And despite the company beating earnings estimates again and again, it hasn’t managed to impress the market enough to keep the stock rallying. Wall Street is punishing the business for seemingly no reason.
This is a company that posted 70% year-over-year revenue growth in Q4 2025 and beat analyst sales estimates by 6.3%. It also beat EPS estimates by 8.7%. Such a beat would’ve sent the stock up by at least the teens a year ago.
How come investors are no longer rewarding Palantir?
Read: Data Shows One Habit Doubles American’s Savings And Boosts Retirement
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
Let’s take a look at the overlapping reasons behind why Palantir has been making a U-turn in the past couple of months.
This is likely the biggest reason behind PLTR stock declining and the market not responding well to good earnings reports. Palantir beat revenue estimates by 6.65% in Q4 2024, which led to a 24% price change. By Q3 2025, a sales growth beat by 8.2% actually led to the stock declining by 8%.
Palantir is growing faster than the “analyst estimates,” but these beats are expected. The analyst’s estimates are based on Palantir’s own lowballed guidance figures, and almost every investor expects Palantir to beat them significantly quarter after quarter.
It has become normalized now, and unless Palantir can start beating earnings estimates by double digits, I don’t expect the market to reward the stock.
The broader AI rally has cooled and lost the euphoric momentum it had last summer. Even Nvidia (NASDAQ:NVDA) stock is trading at these levels, and this has allowed its earnings to catch up to the stock.
When it comes to Palantir, the stock is still at nosebleed levels. Analysts have priced in multiple years of execution prematurely, and it may take another year of sideways trading before Palantir’s financials do make the stock look like a sensible bet.
You’re paying 180 times free cash flow and 234 times earnings. Palantir is unparalleled in terms of how richly the market has priced it.
You may argue that the coming years will bring 50% annual revenue growth, but even that is not enough to justify such a high premium. Even if you look at projected FCF, it would take two to three years before Palantir starts looking like a good idea.
The only way PLTR stock is a good bet is if you believe the market will keep holding at the current triple-digit premium.
That’s not all, though. Many will still argue that since Palantir is a software business with high margins, this warrants the richness baked into the stock. Unfortunately, that argument is falling apart.
Software stocks have been untouchable for years, with software-as-a-service (SaaS) companies routinely trading at 10x sales and 50x earnings.
These companies spent tremendous amounts of money and labor building software, with a plan to perpetually sell the software they built through a subscription model. The market priced these stocks by thinking that they had the golden goose, and people were going to pay for the software license month after month for eternity.
AI may be ruining that software moat by making coding accessible to all.
People with zero to no coding experience can already make problem-solving software with natural language. This begs the question: how long until non-software businesses can make and run their own software with a small team, replacing whatever Palantir does for them today?
Palantir is not the only software stock having to deal with this question. The S&P 500 Software Industry is down 21.3% year-to-date.
Thus, the argument that Palantir is in the software sector insulates it from the ills of having a high valuation is increasingly becoming thin.
I believe the stock will keep trading sideways or continue declining. The ongoing drama (to put it mildly) in the Middle East may lead to more demand from the government side, but I don’t see a multi-year rally returning until late 2027.
The stock is simply too high still, and it will take time before the earnings catch up to that $355 billion market cap.
Most Americans drastically underestimate how much they need to retire and overestimate how prepared they are. But data shows that people with one habit have more than double the savings of those who don’t.
And no, it’s got nothing to do with increasing your income, savings, clipping coupons, or even cutting back on your lifestyle. It’s much more straightforward (and powerful) than any of that. Frankly, it’s shocking more people don’t adopt the habit given how easy it is.