Palantir (NASDAQ:PLTR) stock has been one of the AI-fueled bull market’s biggest winners, but over the past few weeks, the shares have been beating a hasty retreat, largely due to concerns about potential cuts to the U.S. defense budget. In addition, the broader market sell-off, insider selling by CEO Alex Karp, and lingering valuation concerns have further pressured the stock.
However, that’s not nearly enough, says Jefferies analyst Brent Thill, who thinks the stock remains overvalued.
“While there hasn’t been a meaningful change in fundamentals, PLTR continues to trade at a significant premium to software peers (next-highest is NET at 19x), and we believe the multiple is susceptible to further compression on any incremental negative news (changes in AI hype turns, macro environment, deceleration in financial metrics, etc.),” the 5-star analyst said.
Over the course of 2024, Palantir’s EV/STM revenue multiple surged by 291%, a level of expansion last seen during the Covid bubble with high-growth names like Snowflake and Datadog. Yet, after hitting “peak valuation,” both experienced significant multiple contractions within six months. “Our what-if analysis shows a similar magnitude of multiple compression for PLTR within half a year of peaking implies 20x, or a $40 stock. If PLTR were to also fall below 10x within 8 months of reaching peak multiple, that would imply a $21 stock,” Thill went on to explain.
But a frothy valuation is not the only problem because another worrying trend is emerging. Under Rule 10b5-1 trading plans, Thill points out insider selling has continued in 2025, following elevated insider selling activity in 2024, even in the face of the stock’s sharp decline over the past two weeks. During this time, CEO Alex Karp offloaded an additional $45 million in shares after selling more than $2 billion worth in 2024. While he has sold 21% of his total PLTR stake, his current Rule 10b5-1 plan permits the sale of approximately 17 million more shares through September 2025. Similarly, CTO Shyam Sankar has sold another $38 million in shares in the past two weeks, following over $380 million in sales during 2024.
So, what happens next? Well, according to Thill, considering the patterns of other high-multiple stocks after reaching their peaks, the analyst thinks there is “more multiple contraction to come.”
To this end, Thill rates PLTR shares as Underperform (i.e., Sell) and assigns a $60 price target. If achieved, investors should brace for a 21% downside over the one-year timeframe. (To view Thill’s track record, click here)
Thill is not the only PLTR bear on Wall Street. 3 other analysts have also taken a bearish stance, while 10 remain on the fence with Hold ratings and 4 still see upside with a Buy. As a result, the analyst consensus lands at Hold (i.e., Neutral). On the bright side, the average price target of $95.33 suggests a potential 25% gain from current levels. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.