What does 2026 hold for Palantir Technologies (PLTR)? The software and data mining company is wrapping up another tremendous year, up 146% in 2025, which is a great follow-up to its 340% rise in 2024. But Palantir also has its skeptics, including famed investor Michael Burry.
Burry appears to be enjoying a more public profile after closing his hedge fund Scion Asset Management and launching a Substack called “Cassandra Unchained.” He recently made some interesting comments about Palantir, comparing it to former high-flying consultancy DiamondCluster.
DiamondCluster was a business-to-business company that sold expensive consulting services, while Palantir consults and sells a powerful software system powered by artificial intelligence. DiamondCluster’s valuation rose more than 300% during the dot-com bubble, similar to Palantir’s rise. When that bubble burst, DiamondCluster shares fell from $98 to $7.50 in less than a year, and were eventually purchased by PwC in 2010 at $12.50 per share.
Could Palantir suffer the same fate?
Denver-based Palantir is a data analytics company that first rose to prominence as a government contractor. The company’s sophisticated software system extracts data feeds from thousands of points, including satellite images, to provide real-time intelligence to military units and intelligence agencies. Palantir was credited with providing information that led to the location and assassination of 9/11 mastermind Osama bin Laden.
However, Palantir does much more than just military work. It also has a rapidly growing commercial product, powered by its unique Artificial Intelligence Platform (AIP), which helps commercial customers manage inventory and supply chains and analyze the competitive landscape.
Palantir uses five-day boot camps to introduce its platform to potential customers and show them how it can improve their businesses. Since the product uses generative AI and runs on Palantir’s powerful software, the response has been overwhelmingly positive.
“Simply put, if you’re doing anything that involves operational intelligence, whether it’s analytics or artificial intelligence, you’re going to have to find something like our products,” said CEO Alex Karp.
While Palantir stock had a strong 2025, outperforming the S&P 500 ($SPX), growth has slowed in recent months. Shares are up just 12% over the past three months, a good thing for many companies, but not the growth Palantir shareholders were hoping for.
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The biggest problem Palantir points out is the stock’s spectacular valuation. The price-earnings ratio of 425 and the forward price-earnings ratio of 251 indicate that there is already massive growth built into Palantir stock. For comparison, Nvidia (NVDA) is the most successful company in the world with a rapid growth curve as well, and its P/E ratio is only 45. Palantir has to have everything perfect for its valuation to remain strong in the future.
Palantir’s recent earnings reports show the company’s extraordinarily rapid growth cycle. Revenue in the third quarter was $1.18 billion, up 63% from a year ago. The company posted revenue of $600 million with a profit margin of 51% and earnings per share of $0.18, beating the $0.12 analysts expected.
Palantir also continued its rapid growth in both the government and commercial segments. Palantir’s US commercial revenue grew 121% year over year (YoY) to $387 million, and its US government revenue increased 52% year over year to $486 million. The company reported closing 204 deals in the quarter valued at more than $1 million each. It also closed 91 deals (about one a day) valued at more than $5 million each and 53 deals valued at more than $10 million each.
“These results make the transformative impact of using AIP to increase AI leverage undeniable,” Karp said.
Analysts are generally taking a wait-and-see attitude with Palantir. Of the 21 analysts covering the stock, 14 have a “Hold” rating. Four give it “Buy” ratings and three have “Sell” ratings.
The average price target of $192.67 indicates only a potential near-term gain of 4%. The more bullish target of $255 suggests a potential upside of 38%, while the bearish target of $50 is more in line with Burry’s caution, warning of a 73% drop.
All in all, Palantir is a momentum play. It’s impossible to ignore the company’s rapid growth and the number of lucrative deals it’s signing, but valuation is also a big concern and the share price is starting to cool down.
For me, Palantir is still a buy, but I’m more cautious about PLTR stock today than I was a year ago at this point.
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At the date of publication, Patrick Sanders held a position at: PLTR, NVDA. All information and data in this article are for informational purposes only. This article was originally published on Barchart.com
