Is Palantir Finally Priced for Reality?

After a ~9% post-earnings drop, investors are asking if the AI icon just crossed from story to speculation.

Palantir PLTR 0.00%↑ reported yesterday and the stock promptly gave back about 9%.

On the surface, the numbers were stellar. Q3 revenue landed around 1.18 billion dollars, up more than 60% year on year, with net income in the mid 400 million range and management guiding full-year 2025 revenue to roughly 4.4 billion dollars and very healthy free cash flow. Reuters

So why the selloff?
Because everyone already knew Palantir was good. The question now is whether it is too good in the eyes of the market. You also had the headline shock of Michael Burry disclosing a very large short, which hit sentiment right into earnings. Financial Times

You asked for a medium to long term view, using the statement exports you provided plus recent news and peer context. Let’s walk through the business, the numbers, the chart, and finally a clean trade plan with realistic entries and stops.

Quick framing: this is how I’d think about the stock as a disciplined, valuation-sensitive investor, not as someone trying to catch the next meme run.

Key Takeaways

• Palantir’s core business is firing. Q3 revenue grew about 63% year on year, driven by insane demand for its AI Platform (AIP) and strong US government and commercial contracts. Investopedia

• Trailing twelve-month revenue is roughly 3.9 billion dollars, up about 47% vs the prior year. Net income is about 1.1 billion with net margin above 28%. Free cash flow is around 1.8 billion with an FCF margin near 46%.

• The balance sheet is fortress-level: about 6.4 billion in cash and short-term investments, essentially no financial debt, and total equity around 6.7 billion.

• Stock-based comp is still heavy at roughly 740 million over the last year (about 19% of revenue) but is being diluted by rapid top-line growth.

• The problem is valuation. Public data puts Palantir’s market cap near 450–480 billion dollars, with P/E north of 300 and EV to revenue above 100 times. Peers like Snowflake trade closer to 20–23 times sales and around 125 times FCF. Simply Wall St

• Technically, the trend is strong on weekly and daily charts, but the stock is very extended above its medium-term supports and momentum is rolling off after earnings.

• For new money, this is not a “close your eyes and buy” situation. It is a high-quality but speculative satellite position that needs small sizing, patience on entries, and clear stops.

• Trade Approach: Accumulate only on pullbacks toward the 175–185 zone with small position sizing; add near 160–170 if momentum stabilizes. Use 145–150 as a clear stop for thesis invalidation and trim above 200 on strength.

Fantastic business, world-class positioning, but priced like it cannot stumble once.

What Palantir actually does now

Think of Palantir as an operating system for high-stakes decisions.

Three main engines drive the story:

1. Gotham – the defense and intelligence stack used by US and allied militaries, three-letter agencies, and ministries of defense. It is deeply embedded in mission planning and real-time operations.

2. Foundry – the data integration and analytics platform for large enterprises. Think digital twins of factories, supply chains, and financial systems.

3. AIP (Artificial Intelligence Platform) – the current growth rocket. AIP lets customers orchestrate their own AI agents on top of their data, with strong guardrails for security and compliance.

Recent updates from the company and news flow highlight:

• Q3 2025 revenue up about 63% year over year to 1.18 billion dollars.

• US commercial revenue up around 121% year over year, now a real second leg next to government.

• US government revenue still growing strongly, helped by mandates like the US Army’s use of Palantir’s Vantage platform and a multi-billion government contract backlog. Reuters

• Partnerships with Nvidia and expansion in Europe and the UK health system deepen the moat and broaden use cases. Reuters

Customer count is still under 1,000, which is tiny compared with most large software names, but each customer tends to be very large and sticky, often starting small and then expanding spend sharply as the platform proves itself. aol.com

So the “pipeline” here is not FDA approvals like a biotech. It is a pipeline of new AI deployments, new modules on AIP, larger commercial customers, and incremental government programs that tend to be multiyear and mission-critical.

Fundamental analysis

Growth and profitability

• TTM revenue is roughly 3.9 billion dollars, up about 47% vs the prior 12 months.

• Gross profit is about 3.15 billion, which is an 81% gross margin.

• Operating income sits near 895 million, for an operating margin around 23%.

• Net income to stockholders is roughly 1.1 billion, up about 130% from the prior year’s TTM base.

• Diluted EPS over the last four quarters is about 0.42 on roughly 2.57 billion diluted shares.

Cash flow from operations over the last four quarters totals about 1.82 billion and capital expenditures are minimal at around 24 million, giving free cash flow near 1.79 billion. That is an FCF margin just over 46%.

This is rare territory. You have:

• Hypergrowth (40–60% range)

• GAAP profitability

• Very high FCF conversion

That part of the story is almost flawless.

Balance sheet and dilution

From the balance sheet export, at the latest quarter:

• Cash and equivalents about 1.62 billion

• Short-term investments about 4.82 billion

• So roughly 6.4 billion of highly liquid assets

• Total liabilities around 1.43 billion plus lease liabilities of about 0.19 billion

• Total equity roughly 6.69 billion

Palantir is essentially net cash with no meaningful traditional debt. Financially, it can fund R&D and growth internally without leaning on the capital markets.

The main “cost of doing business” is still stock-based compensation. From the cash flow file, SBC across the last several quarters adds up to roughly 740 million, which is just under 20% of TTM revenue. That is high, but given revenue and FCF growth, the percentage is coming down and the business is growing into the dilution.

Valuation vs peers

Here is where the story gets uncomfortable. Public sources (Yahoo, StockAnalysis, GuruFocus) put Palantir at roughly: Yahoo Finance

• Market cap around 450–480 billion dollars

• Trailing P/E well north of 300x

• EV to revenue around 100–130x

• Forward valuation still triple-digit on most earnings metrics

Compare that with Snowflake, another premium data/AI platform name:

• EV around 93 billion

• TTM free cash flow about 734 million

• EV to FCF around 127x

• Price to sales about 23x. GuruFocus

Snowflake is not cheap by any stretch, yet Palantir trades at a multiple of those already rich multiples. Other high-quality software and security names (Datadog, Crowdstrike, MongoDB) cluster in the 15–30x sales range and far lower EV to FCF once they go cash-generative.

So you have a company with:

• Better profitability than many peers

• Similar or higher growth

• But valuation that is 3–6 times richer than an already expensive peer set

That is what Burry and others are really shorting. Not the business, but the expectations curve.

Soft conclusion on fundamentals:
Palantir the business is outstanding. High growth, high margins, huge cash generation, and a fortress balance sheet. The fundamental risk is not execution right now. It is that the current valuation prices in many years of “otherworldly” growth with very little room for disappointment.

Quick palate cleanser: great businesses can still be terrible trades if you do not respect price.

Technical analysis

You gave me a full multi-timeframe set, so let’s condense it to what matters for a medium to long term investor.

Weekly structure

• Weekly price is in a strong uptrend, well above the 20 and 50 week EMAs.

• Weekly RSI is in the mid 60s. That is bullish momentum but not classic blow-off 80+ territory.

• MACD on the weekly is positive and trending up, confirming the underlying trend.

• Bollinger Bands on the weekly show price tagging or slightly piercing the upper band and now curling back inside after the post-earnings drop.

• Stochastic RSI on the weekly has been cycling down from overbought, which usually signals digestion or a sideways to down phase rather than a fresh vertical leg.

Net: the long-term trend is up, but we are extended and momentum is not accelerating further.

Daily and 4-hour

On the daily chart:

• Price spiked into the low 200s and then sold off to the low 190s after earnings, roughly a 7–10% intraday swing.

• The 20 day EMA is sitting in the high 180s. The 50 day EMA is down in the high 170s. Price is still above both, but the gap has begun to close.

• Daily RSI dropped from overbought back toward the mid 50s, a classic “cooling off” move.

• MACD on the daily has rolled over from a strong positive peak but remains above zero.

• Bollinger Bands show a clear upper band squeeze and break, followed by a move back toward the midline, which often leads to either consolidation or a retest of support.

The Fibs give some very useful levels:

• On 4-hour retracements of the latest leg, first supports cluster around 180–181 (0.382) and then 176–177 (0.618).

• On the larger daily swing, the 0.382 retrace is near 171, with deeper support near 160 at the 0.618 level.

• Weekly retracements of the entire move since 2023 put bigger structural support in the 140s for the 0.382 level.

Ichimoku and Kalman trend tools both tell the same story:

• Price is comfortably above the cloud and above the trend channel.

• The cloud itself is rising and thick, which is what you want for a durable primary uptrend.

• The current move is extended above these supports, which increases the odds of mean reversion.

Stoch RSI on the 4-hour and daily has rolled out of overbought. ADX is elevated but not extreme. ATR is rising, which fits the higher volatility after earnings.

Structurally bullish on weekly and daily timeframes, but short-term overextended. The -9% post-earnings drop is the first proper shakeout off this run, and there is room for a further pullback toward 180 and even 170 without damaging the longer trend.

If fundamentals tell you “what” you own, the chart tells you “when” to own it.

A trade approach

This is a medium to long term framework, not a day trade.

Given the combination of elite fundamentals and extreme valuation, I would treat Palantir as a high-quality, high-risk satellite position. That means: small sizing, patience on entries, very explicit stops.

For new capital

1. Do not chase fresh highs
After a multi-hundred-percent run and a valuation north of 100 times sales, buying into spikes above 200 is asking to be the liquidity for someone else.

2. Preferred accumulation zone: 175–185

Why this band:

• 4-hour Fib support around 180–181.

• 20 day EMA and lower Bollinger ranges drifting into the high 180s.

• 50 day EMA and prior consolidation highs in the high 170s.

A reasonable plan:

• Start a first 25–30% position of your desired size in the 185–190 area only if price stabilizes there on reduced intraday volatility.

• Add the next 40–50% near 175–180 if the stock pulls into that support zone with RSI resetting and selling pressure cooling.

3. Deeper value zone: 160–170

• This lines up with the 0.618 daily retrace, prior breakout structure, and would likely coincide with the daily cloud or weekly 20 EMA catching up.

• If the stock gets there without a fundamental blow-up, it is a much better risk-reward entry. That is where I would be most aggressive in terms of allocation, still keeping overall position size modest relative to your portfolio.

4. Stops and risk control

For a medium to long term investor, think in “thesis invalidation” terms.

• A sensible hard stop is a weekly close below 145–150, which is under the 0.382 weekly retrace and would signal that the current parabolic leg has fully broken.

• If you enter around 180 on average and stop at 145, that is about 35 points of risk.

• If you are comfortable risking 1% of your capital on the idea, position size should be around 1% / 35% ≈ 3% of portfolio value at most. For a more conservative 0.5% risk, keep it closer to a 1.5% position.

5. Already long from much lower

If you own from well below 100, you are deep in the money. In that case, I would consider:

• Taking some profits above 190–200 to de-risk.

• Trailing a stop for the remaining core below the 170 area (roughly under the 50 day EMA and key daily support), so you lock in plenty of upside while still allowing the primary trend to work.

  

This is not about timing the exact top. It is about not letting a bubble valuation turn an excellent long-term win into a round trip if the narrative cools.

Bottom line

Palantir is the rare AI story that is not just a story. The business is real, the customers are serious, and the cash is very real. Revenue is growing at 40–60%, margins are expanding, free cash flow is huge, and the company sits on a net-cash balance sheet while selling into a structural tailwind of AI and defense digitization.

The problem is not the business. It is the price you are being asked to pay.

At north of 100 times sales and several hundred times earnings, Palantir is priced for near-perfect execution and a long runway of explosive growth. That can happen, but even small disappointments in growth, margins, regulation, or sentiment can lead to very sharp drawdowns from these levels. Burry’s short is a loud reminder of that risk, not necessarily a verdict on the company itself.

For a disciplined, medium to long term investor, my honest view is:

• Palantir is worth owning only as a small, high-conviction satellite, not as a core holding at today’s multiples.

• You want to be picky on entries, ideally in the 175–185 area or lower, with clear stops under 145–150 and size sized so that you can sleep at night.

• It is absolutely acceptable to say “great company, wrong price for my discipline” and pass until the valuation and the chart give you a better hand.

If you stick to that playbook, you give yourself a chance to participate in the upside of a genuinely special business without letting the hype train run your risk management.

This analysis is for informational and educational purposes only and should not be taken as financial or investment advice.