Palantir Technologies has created one of the most dramatic stories on Wall Street this year, defying conventional investment narratives. In 2025, it became the top-performing stock in the S&P 500, surging over 106% and at points climbing 144% from the start of the year—outpacing even AI heavyweights like Nvidia.

That rise has made Palantir extremely pricy. Shares now trade at a multiple of 214 times expected earnings over the next 12 months, compared to an S&P 500 average of 22 times earnings.

Two hedge fund managers with a track record for market beating returns sold Nvidia and bought Palantir in the second quarter.

Palantir stock (NASDAQ: PLTR) took a sharp hit on Wednesday, falling about 7% as high-valuation tech stocks pulled back across the market. The AI and data analytics company had hit record highs earlier in the month,

Palantir shares tumbled Tuesday afternoon, extending recent losses as a high-profile short seller fueled worries the stock could be overvalued after a strong run earlier this year.

AI software firm Palantir saw strong quarterly revenue, but its price-to-earnings ratio could be a warning sign for investors.

Palantir Technologies Inc. (NASDAQ:PLTR) is one the AI Stocks Analysts Are Watching Closely. On August 18, Palantir stock received a cautious mention from Citron regarding the company’s stock valuation,

Andrew Left argues that investors have overhyped Palantir stock, and its valuation pales in comparison to a true AI leader like OpenAI.