Prediction: This Popular Artificial Intelligence Stock Will Fall Hard in 2026

Core Viewpoint - Palantir's stock has experienced a significant increase of approximately 2,700% since the beginning of 2023, but it is anticipated that the stock may face a correction due to overvaluation [1][2]. Company Performance - Palantir's software business is recognized as a leader in artificial intelligence-powered data analytics, initially designed for government applications but has successfully expanded into the commercial sector [4]. - In Q3, Palantir's commercial revenue surged by 73% year over year to $548 million, while government revenue rose by 55% to $633 million, indicating robust growth across both sectors [5]. - The U.S. commercial revenue specifically increased by 121% year over year to $397 million, contributing significantly to overall growth [8]. Market Position and Valuation - Palantir's stock is currently trading at extremely high valuation levels, with a price-to-sales ratio of 119 and a forward earnings ratio of 251, making it one of the most expensive stocks in the market [12]. - A company growing at a similar rate to Palantir typically trades at around 40 times forward earnings, as seen with Nvidia, which reported a revenue growth rate of 62% [13]. - Analysts predict a slowdown in Palantir's growth rate, with expectations of a 41% revenue growth rate next year, which could extend the time required to reach a more reasonable valuation [14].