Palantir: A Most Peculiar Investment

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Palantir Technologies, darling. One hears such breathless pronouncements about it. Triple-digit gains for shareholders, they say. Rather vulgar, don’t you think? Still, it remains, shall we say, controversial on Wall Street. A stock that seems to inspire either fervent adoration or a particularly pointed form of disdain. Most tiresome.

It’s growing, undeniably. And its software, one gathers, is becoming something of a standard in this artificial intelligence racket. But it’s also, and this is the crux of the matter, quite extraordinarily expensive. Reconciling those two facts is proving… challenging. A bit like trying to make a soufflé rise in a hurricane, really.

Before I inflict my own prediction upon you – a truly dreadful undertaking, I assure you – let’s consider the bullish and bearish viewpoints offered by Morgan Stanley. They’ve captured the range of potential outcomes with a certain… accuracy. Though, frankly, the whole exercise feels a bit like rearranging deckchairs on the Titanic.

The Bullish Fantasy: A Most Unlikely Ascent

Palantir, it seems, develops data analytics software for governments and businesses. It integrates information and machine learning into something called an “ontology.” Sounds frightfully complicated. They also have an adjacent platform for building large language models. One shudders to think.

Various research organizations have, predictably, sung its praises. Forrester Research deems it a leader in AI decisioning platforms. Apparently, it has “current capabilities, growth strategy, and positive customer feedback.” How terribly… positive. The International Data Corp. also ranks it highly in AI-enabled source-to-pay software. Optimizing supply chain management, they say. One hopes it doesn’t involve too much paperwork.

Their recent financial results were, apparently, “exceptional.” Revenue increased 63% to $1.1 billion, and non-GAAP net income rose 110% to $0.21 per share. They’ve also revised their guidance upwards, predicting a 53% increase in revenue for 2025. Morgan Stanley analysts claim it’s “delivering the best growth and profitability in all of software.” A bold statement, wouldn’t you agree? Their bullish forecast puts it at $382 per share within a year, implying a 130% upside. Utterly fantastical, of course.

The Bearish Reality: A More Sensible View

Those same analysts have also outlined a bear case, predicting a drop to $81 per share. A 50% downside. Disappointing results or a bit of outspoken management could bring that about. But it all boils down to valuation, doesn’t it? A rather elementary point, one would have thought.

Palantir currently trades at 102 times sales. One hundred and two! It’s the most expensive stock in the S&P 500, by a considerable margin. AppLovin is second, at a mere 33 times sales. Few software companies have ever achieved such a lofty price-to-sales ratio, and none have sustained it indefinitely. History, my dear, is rarely kind to such excesses.

Among the 100 largest U.S. software stocks, only seven (excluding Palantir) have ever attained a P/S multiple above 100. All seven eventually crashed. The best outcome was a 70% decline, and the worst, a rather dramatic 90%. One begins to see a pattern, doesn’t one?

My Prediction: A Modest Correction

I suspect Palantir will trade around $200 per share in December 2026. A 21% upside. I’ve arrived at this figure by splitting the difference between the bulls and the bears. I doubt either side will alter their views in the next year. Some investors will continue to buy it, simply because its software is becoming the enterprise standard. Others will continue to avoid it, or even short-sell it, because it’s absurdly expensive. Perfectly predictable, really.

The risk-reward ratio is heavily skewed toward risk. It’s predisposed to sharp declines, even without company-specific catalysts. If investors suspect AI spending is unsustainable, or the economy takes a turn for the worse, Palantir could crash. If that prospect discomforts you, my dear, avoid it. One wouldn’t want to be caught in a particularly unpleasant downdraft.

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2026-01-29 12:02