I Predicted Palantir Stock Would Fall in 2025. Here's Why I Was Wrong (And Still Right)

Core Viewpoint - Palantir Technologies' stock experienced a significant increase of 135% in 2025, despite previous predictions of a decline, indicating a disconnect between the company's business performance and its stock valuation [1][3]. Business Performance - Palantir's business is thriving, with its artificial intelligence software gaining traction in both government and commercial sectors, leading to accelerated revenue growth throughout 2025 [3][5]. - The company has demonstrated strong execution and a robust business model, contributing to its impressive performance [4]. Stock Valuation - The stock is currently trading at extraordinarily high multiples, specifically 169 times forward earnings and 112 times sales, suggesting it may be overvalued [4][5]. - The elevated stock valuation raises concerns about potential pullbacks if growth slows down, although the continued acceleration in revenue growth has mitigated immediate selling pressure [5]. Investor Composition - A significant portion of Palantir's shares is held by individual investors, with 56% of shares owned by institutions, compared to much higher institutional ownership in companies like Alphabet and Microsoft [6][8]. - This individual investor base may contribute to the stock's resilience despite its apparent overvaluation, similar to the situation with Tesla [6].