Palantir Stock: Buy, Sell, or Hold?
Palantir Technologies (NASDAQ: PLTR) has taken a hit recently, falling over 31% from its highs, despite still being up 264% in the past year.
- With the stock pulling back and uncertainty brewing, many investors are questioning whether it’s time to buy the dip, hold tight, or cut losses.
- Let’s break down the key factors shaping Palantir’s outlook right now.
Is DOGE good or bad news for Palantir?
A major concern is how Elon Musk’s Department of Government Efficiency (DOGE) and potential spending cuts will affect Palantir’s core business.
- The U.S. government remains Palantir’s largest client, making up 42% of total revenue, primarily through defense contracts.
- The company had started gaining traction again as agencies embraced AI-powered platforms pre-DOGE, but things may be shifting.
The White House has proposed cutting the Department of Defense budget by 8% annually over five years, which could reduce funding by nearly $300 billion.
- That scale of reduction could directly pressure Palantir’s growth, especially if cost-saving solutions are prioritized over premium analytics platforms.
While CEO Alex Karp has publicly supported DOGE, calling the initiative “thrilling,” his share-selling activity paints a more cautious picture.
- Karp changed his 10b5-1 selling plan in December and can now resume stock sales post-cooling-off period.
- Meanwhile, co-founder Stephen Cohen sold 3.75 million shares, worth $310 million, as soon as his window opened, raising eyebrows about insider confidence.
This mix of public optimism and private selling creates uncertainty — especially as government funding remains a central part of Palantir’s business model.
Strong growth meets steep valuation
Outside government contracts, Palantir is gaining momentum in the commercial sector, driven by its AI operating system strategy.
- Instead of building AI models itself, Palantir focuses on creating software to deploy and manage AI workflows.
- The company uses AI boot camps to onboard clients and help them apply AI to mission-critical areas.
Many new customers are still in the proof-of-concept stage, but the pipeline shows potential.
- If Palantir can scale these projects into full production, commercial revenue could significantly grow.
However, the valuation remains a sticking point.
- Despite the recent drop, Palantir trades at a forward price-to-sales (P/S) ratio of 53.
- That’s extremely high, even for a high-growth SaaS company — particularly one that grew revenue by 36% year over year last quarter.
Investors need to ask: does the growth rate justify the premium price tag?
Insider selling raises caution
The timing of insider sales is always worth noting, especially during periods of market volatility.
- Both Karp and Cohen adjusted their selling plans and acted quickly once allowed to sell shares.
- Although legal and pre-planned, the scale of Cohen’s $310 million sale sends a message that some insiders may view current prices as lofty.
These actions could signal a lack of confidence in near-term upside or simply prudent diversification.
- Either way, it’s a potential red flag when paired with other market headwinds.
Verdict: Is Palantir a buy, sell, or hold?
Palantir remains a high-potential business with solid technology and growing interest in both government and commercial sectors.
- But given the rich valuation, ongoing executive selling, and uncertainty around defense spending, the stock looks overpriced at current levels.
For now, Palantir is a hold — not a buy.
- While it’s not necessarily a sell unless your risk tolerance is low, I’d wait for a major pullback, ideally a 50% drop, before getting interested.
In short, Palantir is a great company at the wrong price — for now.