Palantir Technologies-Palantir Stock Has Fallen 30% From Its High. History Says This Will Happen Next.

Core Viewpoint - Palantir Technologies has seen a significant increase in its stock price, rising 340% in 2024 due to strong financial results and growing demand for its AI platform, making it the best-performing stock in the S&P 500 [1] Group 1: Stock Performance and Valuation Concerns - Despite the impressive rise, Palantir's stock has dropped 30% since reaching a peak of nearly $125 per share on February 18, attributed to insider selling, potential Pentagon budget cuts, and tariff concerns [2] - Historical data suggests that Palantir could decline more than 70% from its current price, as Wall Street analysts have raised alarms about its high valuation compared to other software companies [3][4] - Palantir's peak price-to-sales (P/S) multiple reached 107 on February 18, 2025, a level only achieved by six other software stocks in the past 20 years, all of which subsequently experienced significant declines [3][5] Group 2: Business Strength and Market Position - Palantir is recognized as a leader in decision-intelligence software and machine learning platforms, outperforming competitors like Alphabet, Amazon, and Microsoft in certain metrics [9][10] - The company is well-positioned to benefit from a rapidly growing AI market, with IDC projecting AI platform sales to grow at 40% annually, reaching$ 153 billion by 2028 [10] Group 3: Earnings Expectations and Valuation Metrics - Wall Street anticipates a 37% increase in Palantir's adjusted earnings for 2025, yet the current valuation of 215 times adjusted earnings is considered excessively high [11] - Despite beating consensus earnings estimates by an average of 14% over the last six quarters, the stock remains extraordinarily expensive even if this trend continues [11][12]