Why Palantir Stock Is Falling (Again) Today

Shares of even the most successful companies can crash when valuations get this disconnected from reality.

| More on:
PLTRCrash

Key Points

This article first appeared on our U.S. website.

Shares of Palantir (NASDAQ: PLTR) are falling once again. The stock is down about 2% as of 2 p.m. Wednesday after having dropped as much as 5% earlier in the day. Palantir stock gave up nearly 8% Tuesday and has been on a downslide since Aug. 12.

The AI-powered company is seeing its share slide as part of a larger sell-off in tech, as concerns over the health of the U.S. economy mount. Given its sky-high valuation, Palantir’s stock is getting hit especially hard.

Palantir stock plunges as tech sell-off intensifies

Among the companies that actually take artificial intelligence (AI) and apply it in the real world, Palantir has been a notable standout, delivering massive revenue and earnings growth while rivals like C3.ai and BigBear.ai are still operating deep in the red and seeing their sales stagnate.

That’s led investors to pile into Palantir stock, which has reached an astronomical valuation of nearly 500 times earnings. That’s not a particularly sustainable valuation, and as concerns mount after recent jobs data showed a slowing economy, many investors are rotating out of riskier tech stocks sitting near record highs.

Citron Research takes aim at Palantir’s valuation

Palantir was also the target of a short report from one of the most prominent short sellers on the market, Citron Research, which pointed out that after OpenAI’s latest funding round, it is valued at roughly 17 times its sales. Palantir’s stock carries a price-to-sales (P/S) multiple nearly seven times that of OpenAI — the company at the very heart of the AI boom. Citron believes this is not rational.

I agree. Palantir may be firing on all cylinders, but its stock is disconnected from reality, and until it comes back down to earth, I personally would not invest.

Fool contributor Johnny Rice has no position in any of the stocks mentioned. The Motley Fool recommends Palantir Technologies. The Motley Fool has a disclosure policy.

More on Tech Stocks

container trucks and cargo planes are part of global logistics system
Tech Stocks

This Artificial Intelligence (AI) Stock Could Be the Best Bargain in the Market Right Now

Kinaxis is a profitable, AI-powered supply-chain software leader trading below historical multiples, making it a rare bargain amid AI hype.

Read more »

A person's hand cupped open with a hologram of an AI chatbot above saying Hi, can I help you
Tech Stocks

Forget Constellation Software: Here’s Why SHOP and CLS Are Better Tech Bets for 2026

Constellation Software (TSX:CSU) stock is getting beat up and it might not be cheap enough to buy quite yet.

Read more »

The virtual button with the letters AI in a circle hovering above a keyboard, about to be clicked by a cursor.
Tech Stocks

Cohere’s IPO Coming Soon? Will the Canadian AI Startup Be a Buy?

As we wait for a Cohere IPO, AI investors might wish to check out Shopify (TSX:SHOP) stock in the meantime.

Read more »

nvda stock nok stock why gain partnership ai stocks
Tech Stocks

Get Smart: Ditch This Crypto Stock for a Rare Tech Gem

A dividend-paying tech stock is a safer investment option than a high-growth crypto miner.

Read more »

The TFSA is a powerful savings vehicle for Canadians who are saving for retirement.
Tech Stocks

The Only 2 Canadian Growth Stocks I’d Ever Put in a TFSA

Let's dive into why Shopify (TSX:SHOP) and Constellation Software (TSX:CSU) remain two top Canadian growth stocks long-term investors should consider.

Read more »

visualization of a digital brain
Tech Stocks

This Canadian Stock Could Be the Hidden Gem of the Decade

Topicus.com is quietly buying niche European software firms, building recurring revenue and cash flow that could compound into big gains…

Read more »

Digital background depicting innovative technologies in (AI) artificial systems, neural interfaces and internet machine learning technologies
Tech Stocks

AI Sets the Stage for Massive Long-term Gains in Canadian Tech and Infrastructure Stocks

Canadian Tech companies are setting the stage for massive long-term growth. Here’s a duo that are just too hard-to-ignore in…

Read more »

Data Center Engineer Using Laptop Computer crypto mining
Tech Stocks

Are Canadian Bitcoin-Mining Stocks a Buy Right Now?

Bitfarms (TSX:BITF) shares look quite intriguing, especially after its dip.

Read more »