Honestly, if you've been watching the ticker for Palantir Technologies lately, it's been a wild ride. We are sitting here in early 2026, and the "AI darling" of last year is starting to feel a little heavy. Just a few weeks ago, on the first trading day of the year, shares of Palantir (PLTR) dropped nearly 6% in a single session. No bad news. No scandals. Just a massive rotation out of software and into chips, mixed with a bunch of investors finally hitting the "sell" button to lock in those 138% gains they made in 2025 without triggering a tax bill until 2027.
But is this just a "healthy correction" or the start of the Palantir Technologies stock plunge prediction that the bears have been shouting about since it was in the $20s?
The $450 Billion Question
The valuation is, frankly, bananas. You’ve got a company trading at a price-to-earnings (P/E) multiple that has hovered over 400 for much of the past year. Even now, after a dip, it's sitting around 390. To put that in perspective, during the dot-com bubble, the "kings of the internet" like Cisco and Microsoft peaked at price-to-sales ratios between 30 and 50. Palantir's P/S ratio has recently touched levels that make those look conservative.
When a stock is priced for absolute perfection, even "great" isn't good enough.
Take the Q3 2025 earnings report. The numbers were objectively insane. Total revenue grew 63% year-over-year to $1.18 billion. Their U.S. commercial revenue—the real engine here—surged by 121%. They even hit a Rule of 40 score of 114%, which is practically unheard of for a company of this scale. Yet, the stock edged down after the report. Why? Because the market had already baked in a miracle.
Why the bears think a crash is coming
There is a growing camp of analysts who believe the Palantir Technologies stock plunge prediction is inevitable simply because of the gravity of math.
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- The "Meme-Growth" Hybrid: Some experts, like those at The Motley Fool, argue Palantir has become a hybrid of a meme stock and a legitimate growth company. When retail hype drives the price, the fall can be just as fast as the rise.
- Economic Reality: While AI is booming, the broader economy is feeling the pinch of 2025’s tariff hikes and persistent inflation concerns. If the "AI supercycle" hits a speed bump, high-multiple stocks like PLTR are the first to get chopped.
- Historical Precedent: In 2022, when the S&P 500 dropped 19%, Palantir plummeted 65%. With its valuation much higher now, a similar market correction could see the stock falling back toward the $50-$100 range from its recent peaks near $200.
Looking at the technicals
Right now, the 200-day moving average is a key level to watch. For much of late 2025, that line acted as a floor. If we break below the 100-day SMA—currently near $163—things could get ugly fast. The RSI (Relative Strength Index) is currently sitting in a neutral zone around 52, which basically means the market is undecided. It’s waiting for the next catalyst.
That catalyst is coming on February 2, 2026.
That’s when Palantir drops its Q4 and full-year 2025 results. If they don’t beat their own raised guidance of $1.33 billion for the quarter, the "plunge" won't be a prediction anymore; it'll be the headline.
Is it actually overvalued?
It depends on who you ask. Simply Wall St's DCF (Discounted Cash Flow) models recently suggested the stock might be overvalued by as much as 89%, putting a "fair value" closer to $95. On the flip side, Bank of America and Citi analysts have been raising targets toward $235, arguing that Palantir is the "base layer" of the entire AI economy.
They aren't just selling software; they're selling the operating system for modern warfare and corporate efficiency. Their U.S. commercial customer count jumped 65% to 530 last year. That’s not just hype—that’s deep integration into the Fortune 500.
What you should actually do
If you're holding Palantir right now, you're basically playing a game of chicken with valuation.
- For the Long-Termers: If you bought in at $15 or $20, a 20% plunge doesn't really change the story. The company is profitable, has zero debt, and sits on over $6 billion in cash. You might just want to stop checking the price every hour.
- For the New Money: Buying at a P/E of 400 is risky. Period. Most "smart money" is looking for a better entry point, perhaps a retest of those support levels in the $140-$150 range.
- The "Profit-Takers": There's no shame in taking some off the table. As one investor on Investing.com recently noted, selling 80% to lock in gains after a 170% run is just sensible risk management.
The Palantir Technologies stock plunge prediction isn't a guarantee that the company is failing. It's an acknowledgement that the stock price has outrun the business reality. Watch the February 2nd earnings call like a hawk. If the guidance for 2026 shows even a slight deceleration from the 50%+ growth rates we saw in 2025, the market will likely reset the price to a more "earthly" valuation.
Stay cautious, keep an eye on the $160 support level, and don't let the AI FOMO override your math.
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Actionable Next Steps:
- Check your exposure: Ensure Palantir doesn't make up more than 5-10% of your total portfolio given its current volatility.
- Set "Stop-Loss" orders: If you are sitting on massive gains, consider a trailing stop-loss at 15% below the current price to protect your capital.
- Analyze the Q4 Earnings (Feb 2): Specifically look for "Remaining Performance Obligations" (RPO). If this number stays above $2.6 billion and continues to grow, the long-term bull case remains intact despite any short-term price plunges.