Palantir’s Valuation Challenge Amidst Breakneck Growth

Palantir Technologies is currently securing major government and commercial contracts at a remarkable pace. While operational momentum is exceptionally strong, with shares more than doubling in value during 2025, investors are questioning the sustainability of its story given an already sky-high valuation.

Fundamentally, Palantir has been one of the top performers within the S&P 500 this year. The company surpassed $1 billion in quarterly revenue for the first time in Q3 2025. Revenue surged 62.8% year-over-year to $1.18 billion.

This growth is primarily driven by its US commercial segment, which is expanding at a significantly faster rate than its government business:
* US commercial revenue increased 121% year-over-year in the third quarter.
* US government revenue grew 52% over the same period.

This strategic shift toward broader enterprise adoption is a key factor attracting investor interest and helps justify part of the company's premium valuation. Palantir has firmly established itself as a core provider of AI infrastructure through a combination of substantial government contracts, expanded enterprise partnerships, and robust organic growth.

A Flurry of Strategic Contract Wins

The recent wave of announcements underscores this momentum. On December 10, a significant partnership with the US Navy for the "ShipOS" program was unveiled. The contract, valued at up to $448 million, involves deploying Palantir's Foundry and AIP platforms across the entire US Maritime Industrial Base, encompassing shipbuilders, public shipyards, and approximately 100 suppliers. Initial rollout will focus heavily on the submarine industrial base.

US Navy Secretary John Phelan, appearing with Palantir CEO Alex Karp, described ShipOS as a new approach to the service's entire workflow. The platform is designed to embed Palantir's tools at all decision-making levels to fundamentally accelerate processes. Pilot projects demonstrate its potential impact:
* At General Dynamics Electric Boat, submarine planning effort was reduced from 160 manual hours to under 10 minutes.
* Material inspection at Portsmouth Naval Shipyard shrank from several weeks to less than one hour.

Shortly after, on December 16, the company announced a major expansion in the commercial sector through a strategic partnership with Accenture. The newly formed "Accenture Palantir Business Group" aims to accelerate the global adoption of enterprise AI. Accenture will serve as the preferred global transformation partner for Palantir's platforms, with over 2,000 specialized Accenture personnel and dedicated engineers from both companies focusing on client projects in healthcare, telecommunications, industrial manufacturing, consumer goods, and financial services. A particular emphasis will be on data center and AI infrastructure programs.

Adding to this, Palantir reported a three-year contract extension on December 15 with France's domestic intelligence agency, the DGSI. This partnership, which has existed for nearly a decade, was instrumental during major security events like the 2024 Olympic and Paralympic Games in France. The renewal signals that French authorities view Palantir's solutions as reliable and battle-tested, an important endorsement for other government clients.

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

Lofty Valuation and Mixed Analyst Sentiment

Despite the operational strength, the stock's valuation is a primary topic of debate. Shares trade at a price-to-earnings ratio exceeding 400, with a market capitalization of approximately $442 billion. This pricing implies expectations for many years of exceptionally high growth.

Analyst perspectives present a mixed picture:
* 7 recommend buying the stock.
* 17 advise holding.
* 3 suggest selling.
* The average price target is $172.28.

In a December analysis, Mizuho characterized Palantir's recent execution as "impressive" across both commercial and government segments but expressed surprise at the valuation level achieved.

Notable insider selling activity has also been observed. Over the past 90 days, insiders disposed of roughly 1,008,844 shares worth about $164.75 million. This includes CFO David A. Glazer, who sold 9,000 shares at an average price of $185.91 on December 12. While such sales are not automatically a warning sign, they highlight the magnitude of the stock's prior advance.

Technical and Price Action Context

From a technical standpoint, the stock has formed a "cup base" pattern with a potential buy point at $207.52, according to Investor’s Business Daily. The share price remains about 12% below its early November record high but has reclaimed key moving averages during December.

The 52-week range of $63.40 to $207.52 illustrates the stock's volatility throughout 2025. Year-to-date, the equity has gained approximately 125%, with a twelve-month increase of over 130%. Closing at €165.20 on Friday, Palantir trades comfortably above its 50- and 200-day moving averages, suggesting the overall trend remains intact. However, a Relative Strength Index (RSI) reading of 78.8 signals technically overbought conditions.

Forthcoming Tests and Outlook

The next significant test arrives in early February 2026, with the Q4 earnings report scheduled for February 2. Current analyst consensus estimates project earnings per share of $0.23 and revenue of approximately $1.34 billion, representing 62% year-over-year growth.

For the full year 2025, forecasts call for EPS of $0.72 and revenue of $4.41 billion. Looking ahead to 2026, consensus estimates rise to $1.01 EPS and $6.31 billion in revenue. The current valuation, however, leaves little room for disappointment. The coming quarters will reveal whether Palantir can sustain its high growth rates—a necessary condition for the market to continue justifying its present multiples.