Palantir Stock: 5 Risks Investors Shouldn't Ignore

Core Viewpoint - Palantir Technologies has experienced significant stock growth, increasing over 5 times in the past year, driven by interest in generative AI, government contracts, and geopolitical instability [1] Valuation Risk - Palantir's stock trades at 100x estimated 2025 revenues and 280x forward adjusted earnings, indicating high valuation multiples that leave little room for error [3] - Sales are projected to rise 45% this year and 34% next year, but other high-growth AI companies are trading at lower multiples despite similar growth rates [3] Government Contract Dependence - U.S. government revenues increased by 53% year-over-year to $426 million, highlighting reliance on government contracts [4] - Future growth is uncertain due to the unpredictable nature of government contracts and potential shifts in political priorities that could impact demand for Palantir's software [4] Commercial Growth Uncertainty - Palantir's long-term growth is tied to its commercial business, particularly the Foundry platform, which has seen U.S. commercial revenue nearly double [5] - The complexity and cost of software implementations may limit appeal to small and mid-sized businesses, necessitating a different market approach [5] Macro & Market Risks - Palantir's stock is sensitive to macroeconomic conditions, including a cooling U.S. job market and high tariffs, which could affect corporate customers [6] - Broader economic challenges and fluctuating investor sentiment towards high-growth stocks may pose risks to Palantir's commercial prospects [7] Historical Volatility - Palantir stock has shown vulnerability, losing over 70% of its value in 2022 before recovering to a high of $180 by July 2023, indicating potential for significant gains and losses [8]