History Says Now Is the Time to Sell Palantir Stock

Core Viewpoint - Palantir's stock has surged approximately 90% in the first half of 2025, but its financial performance does not justify this increase, indicating potential caution for investors [1][6]. Financial Performance - Palantir's revenue grew by 39% year over year to $884 million in Q1, with U.S. commercial revenue increasing by 71% to $255 million [5]. - For Q2, management projects revenue of $936 million, reflecting a 38% growth rate, which is a slowdown compared to Q1 [5]. - Despite the stock's significant rise, revenue growth does not align with the stock price increase, raising concerns about sustainability [6]. Valuation Concerns - Palantir's stock is currently trading at 115 times sales, a valuation level rarely seen and typically associated with poor investment outcomes [7][14]. - Historical examples of stocks trading over 100 times sales, such as Zoom and Snowflake, have shown that such high valuations often lead to significant declines when growth rates do not support them [9][12][14]. Market Perception - Investors have viewed Palantir as a key player in the AI sector, expecting it to benefit from increasing demand for AI software, which has been validated by its growth [4]. - However, the stock's performance has become disconnected from the company's actual business growth, indicating a reliance on market hype rather than fundamentals [6][14].