Palantir (PLTR) Analysis: 17% Decline from Peak Amid AI Bubble Concerns

This analysis is based on the Reddit discussion [1] published on November 7, 2025, highlighting Palantir’s 17% decline from its peak despite strong earnings performance. The pullback reflects a complex interplay of strong fundamental performance versus extreme valuation concerns and high-profile bearish positioning.

Palantir is currently trading at $169.68, down 3.07% on the day and 14.81% over the past 5 days [0]. The stock reached its 52-week high of $207.52 before this recent decline, representing an approximately 18% pullback from the peak [0]. This decline occurs within a broader technology sector sell-off, with the NASDAQ Composite down 1.22% to 22,612.74 and the S&P 500 down 0.77% to 6,644.51 [0].

Palantir’s recent performance demonstrates strong business fundamentals:

• Revenue Growth
  : 63% YoY to $1.1B in Q3, marking the ninth consecutive acceleration [1]
• Profitability
  : 28.11% net profit margin and 21.81% operating margin [0]
• ROE
  : 19.09% [0]

However, these fundamentals are overshadowed by unprecedented valuation multiples:

• P/E Ratio
  : 366.63x (forward earnings) [0]
• Price-to-Sales
  : 116x [6]
• Market Cap
  : $387.66B vs. $3.8B TTM revenue [0][6]

Creative Planning analyst Charlie Bilello noted that Palantir traded at over 240x forward earnings, “the highest valuation for a company of its size ($491 billion market cap) in history” [1].

: The most significant recent development is Michael Burry’s Scion Asset Management purchasing $912 million worth of put options on Palantir [5][6]. Burry, famous for correctly predicting the 2008 housing crisis, has taken a bearish stance on AI stocks, arguing they may be in a bubble [5][6].

: Recent Form 4 filings show Palantir director Alex Moore sold approximately $4.1 million worth of shares (23,000 shares) between $202.62-$206.60 per share [1]. While this appears to be a pre-arranged 10b5-1 trading plan, it adds to negative sentiment [1]. Combined insider selling at Nvidia and Palantir totals $9.3 billion over the past two years [1].

: Eight of the top 10 most valuable U.S. companies are AI stocks worth $23 trillion collectively, nearly matching U.S. GDP of $29 trillion [6]. This concentration creates systemic risk for the entire sector.

The market presents two fundamentally different views of Palantir:

: The Reddit discussion author views the pullback as short-term noise and a good opportunity to scale into a long-term position [1]. This perspective is supported by Palantir’s strong competitive advantages, including government contracts through Gotham platform and commercial growth through Foundry platform [1]. Wedbush analyst Dan Ives recognizes Palantir’s AI platform as “gold standard” [1].

: Wall Street remains divided with a consensus target of $200.00 (+17.9% from current), but significant bearish targets from RBC Capital at $50 (-72% downside) and Jefferies at $70 (-61% downside) [1]. Multiple institutional investors maintain short positions, including Goldman Sachs and Millennium Management [2].

Historical patterns suggest that extreme valuation multiples combined with high-profile short positions and insider selling typically lead to significant price corrections. The current situation mirrors previous tech bubble scenarios where strong fundamentals were overshadowed by unsustainable valuations.

Burry’s track record on timing is mixed. While successful with the housing crisis, he has had notable misses on Tesla and GameStop [5]. This suggests that while the bubble concerns may be valid, the timing of any correction remains uncertain.

1. Extreme Valuation Multiple
   : Trading at 366x earnings and 116x sales represents unprecedented valuation levels that historically lead to significant corrections [0][6].

2. Concentration Risk
   : Heavy dependence on AI sector momentum makes the stock vulnerable to sector-wide corrections [6].

3. Insider Selling Pattern
   : While individual sales may be planned, the aggregate $9.3 billion in insider selling across AI stocks suggests valuation concerns among those with best information access [1].

1. Strong Fundamentals
   : Consistent revenue acceleration and improving profitability metrics [0][1]

2. Competitive Moat
   : Strong positioning in both government and commercial AI markets [1]

3. Market Leadership
   : Recognized as AI platform “gold standard” by industry analysts [1]

1. Q4 Earnings Guidance
   : Watch for any moderation in growth expectations when Palantir reports next quarter [1]

2. AI Sector Rotation
   : Monitor institutional flows out of AI stocks and into other sectors [6]

3. Burry’s Position Changes
   : Track any modifications to Scion’s put options positions in future 13F filings [5][6]

4. Valuation Multiple Contraction
   : Watch for compression in P/E and P/S multiples as the market reassesses AI stock valuations [0][1]

Palantir presents a complex investment case with strong fundamental growth metrics offset by extreme valuation concerns. The 17% decline from its peak reflects market uncertainty about AI stock sustainability rather than company-specific issues. While the long-term AI thesis remains compelling, current valuation levels suggest significant downside risk if the AI sector experiences a rotation or bubble correction.

The stock’s future performance will likely depend on:

• Ability to maintain current growth rates and justify premium valuations
• Overall AI sector sentiment and institutional positioning
• Potential valuation multiple compression as the market matures

Investors should carefully weigh the strong business fundamentals against the unprecedented valuation risks and high-profile bearish positioning when evaluating this opportunity.