Veteran analyst revamps Palantir stock gameplan after slump

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the U.S. government, military, and commercial clients. The stock soared 340% in 2024 and 108% this year as demand for AI infrastructure surged across sectors.On August 4, Palantir posted a record second-quarter revenue of $1 billion, up 48% year-over-year. Its adjusted earnings of 16 cents also topped forecasts of 14 cents.The company also raised its full-year guidance to between $4.142 billion and $4.150 billion, up from a prior range of $3.89 billion to $3.90 billion.Yet its stock now struggles to hold its post-earnings gains.Palantir stock is up more than 100% this year.Image source: Bloomberg/Getty ImagesPalantir’s dip on Aug. 19 came together with a broader market pullback. Still, the stock has its own problems.Despite strong earnings and outlook, Palantir’s sky-high valuation has raised eyebrows. The stock currently trades at a forward price-to-earnings ratio of 250, much higher than peers like Salesforce  (CRM)  (21.7) and Microsoft  (MSFT) (32.9).Related: Cathie Wood sells $28 million of popular AI stockPalantir’s earnings quality has also been questioned. “Valuation is absurd,” The Motley Fool's analyst Sean Williams wrote in July. He pointed out that 40% of the company’s pretax income last year came from interest on its cash.Analysts are aware of the trading premium. Short seller Andrew Left of Citron Research recently said Palantir has become “detached from fundamentals” and sees its fair value at $40.More Tech Stocks:Veteran analyst names 30 AI stocks shaping future of technologyApple iPhone faces a major threat from SamsungTiger Global buys more Nvidia, Amazon, exits surging tech stocksStill, some analysts remain confident in the upside. Earlier this month, Piper Sandler raised its price target on Palantir to $182 with an overweight rating, citing strong demand across government and U.S. commercial segments. While acknowledging the stock’s high valuation and risk, the firm said Palantir’s growth and margin model warrants a premium.Some major investors are cashing out. Billionaire Stanley Druckenmiller sold all his Palantir shares in the first quarter of 2025, and Cathie Wood sold about 153,338 shares worth roughly $28 million in August.Stephen Guilfoyle, a 30-year Wall Street veteran who now runs Sarge986 LLC, a family trading operation, attributed Palantir’s recent decline to profit-taking by short-term traders. He noted that the “swing crowd” likely locked in gains as the stock tested a key moving average, accelerating the sell-off.Terms and Privacy PolicyPrivacy & Cookie SettingsMore InfoS&P Futures6,374.25 -14.00 (-0.22%)Dow Futures44,812.00 -42.00 (-0.09%)Nasdaq Futures23,123.00 -96.75 (-0.42%)Russell 2000 Futures2,279.50 -1.10 (-0.05%)VIX16.60 +0.91 (+5.80%)Gold3,369.60 -12.00 (-0.35%)PortfolioSign in to access your portfolioSign inTop gainersXPEV XPeng Inc. 22.75 +2.38 (+11.68%)TLX Telix Pharmaceuticals Limited 12.09 +1.12 (+10.21%)YMM Full Truck Alliance Co. 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