Palantir’s Lofty Valuation Demands Flawless Execution

Palantir Technologies shares are currently trading near $188, representing a staggering year-to-date gain exceeding 150%. This rally has propelled the data analytics firm to a market capitalization of approximately $450 billion. While the technical chart pattern remains bullish, a chorus of warnings is growing louder: the current valuation leaves almost no room for error.

The operational performance fueling this surge is robust. For the third quarter of 2025, the company reported impressive results:
* Total revenue reached $1.18 billion, a 63% increase year-over-year.
* Its U.S. commercial customer business expanded by 121%.
* GAAP net income stood at $476 million, soaring 231% higher.

These figures highlight a significant shift in Palantir's business model. The company's artificial intelligence platform, AIP, is gaining substantial traction beyond its traditional government clientele. Commercial revenue is now becoming the dominant growth driver, reducing the firm's historical dependence on contracts with public sector agencies.

Technical Breakout Follows Contract News

The stock has posted gains for five consecutive trading sessions, briefly pushing past the $190 level. This upward move was supported by a "cup-with-handle" chart formation, a pattern that often attracts institutional buying interest. Shares advanced roughly 10% in the past week alone.

Should investors sell immediately? Or is it worth buying Palantir?

A key catalyst for this renewed momentum was the mid-December announcement of a multi-year contract extension with France's domestic intelligence agency, the DGSI. This deal reinforced the stability of Palantir's business with European government entities.

Record-High Valuation Under Scrutiny

Despite these strong fundamentals, analysts are viewing the present share price with caution. The forward price-to-earnings ratio sits above 260, far exceeding the industry average of around 24. A TipRanks report published on December 29 pointed to "three warning signs": over 50% of revenue still originates from government contracts, the elevated valuation tolerates no disappointments, and a potential normalization in AI spending could dampen future expectations.

Market observers describe this scenario as creating "perfection pressure." While retail investors maintain their optimism, institutional flow data suggests some major players are beginning to establish hedges against a possible market correction.

The $190 Threshold: A Critical Juncture

From a technical analysis perspective, the $190 price point has become a crucial focal point. Chart technicians indicate that a sustained drop below this support level could trigger a pullback toward $168. Conversely, if the stock maintains its footing above $190, the path remains open toward the psychologically significant $200 milestone as the market approaches the turn of the year in 2026.