Palantir Technologies Inc (NASDAQ: PLTR) is tumbling this morning even after the data analytics firm reported another blockbuster quarter and raised its guidance for the full year.
Why? Primarily because of valuation concerns. At nearly 450 times forward earnings, PLTR shares are priced for perfection – and then some.
Palantir has managed to defy valuation multiple in 2025, with the stock still up over 150% year-to-date. But can it retain that multiple over the long-term, or is it a time bomb set to go off next year?
Let’s find out!
Palantir stock vs Nvidia: a tale of two multiples
PLTR stock is currently among the most expensive S&P 500 names. Even the undisputed AI leader, Nvidia, is currently trading at a forward price-to-earnings (P/E) multiple of only 48.
According to Loop Capital analysts, the “golden wave” of artificial intelligence will help NVDA continue to grow at a fast clip and achieve a market cap of $8.5 trillion within the next few years.
Interestingly, if the AI chips behemoth were to “not grow” but just “maintain” its current earnings trajectory as it achieves that valuation, its P/E would still be sharply lower than Palantir’s today.
This comparison underscores just how stretched Palantir shares’ valuation has become – especially given that Nvidia has infinitely greater earnings power and market dominance.
Jefferies sees PLTR shares’ multiple as ‘extreme’
Jefferies analyst Brent Thill also believes PLTR shares’ valuation makes no sense whatsoever.
While the company sure recorded an incredibly strong Q3, its current multiple of about 83x CY26E revenue can’t be justified, he told clients in a post-earnings research note today.
“Even under a bullish scenario where the company accelerates to a 60% 4-year CAGR – the stock would need to trade at 27x CY28E revenue just to justify its current price.”
Thill dubbed the risk-reward as unfavourable, adding Palantir’s stock price is super vulnerable to a sharp decline if the AI hype cycle so much as signals a downtick.
Jefferies maintains its “underperform” rating on the AI stock – and sees it losing more than 55% to reprint $70 by late 2026. The investment firm’s view further substantiates that Palantir is trading at an unsustainable valuation multiple at writing.
Palantir’s PE ratio is ‘impossible’ to ignore
Echoing similar concerns is Freedom Holding’s senior analyst Almas Almaganbetov.
On Tuesday, Almaganbetov told Invezz that Palantir Technologies’ current valuation implies “the market is pricing in long-term hypergrowth in its earnings that – by definition – can’t be sustained indefinitely.”
At nearly 450x forward earnings, ignoring PLTR stock’s multiple is “impossible, he noted, adding it has created a buffer of disappointment where even strong results can trigger a sell-off.
In conclusion, there’s little doubt that Palantir is executing well. Its AI-enabled software is gaining traction across government and commercial sectors – and its partnerships with the likes of Nvidia, Snowflake, and Lumen reinforce its strategic relevance.
But even great companies can be overvalued. While Palantir may continue to benefit from artificial intelligence tailwinds, investors must question whether there are more reasonably priced ways to ride the same wave.
At current levels, Palantir stock leaves little room for error – and that’s a difficult setup in a market that’s quick to punish even the slightest miss.
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