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Stock up 127% in 2025, but valuation remains a concern
Palantir Technologies has been one of 2025’s standout performers on the stock market, with its shares rising an impressive 127% year-to-date. This surge has largely been driven by the company’s deepening presence in the artificial intelligence space — a sector that continues to excite investors globally.
While many retail traders remain bullish on Palantir, viewing it as a high-potential AI play, some on Wall Street are sounding the alarm on its valuation excesses. Analysts at Mizuho Securities, for example, recently reiterated their Neutral rating on the stock with a $165 price target, suggesting that current levels may be stretched.
On Monday, Palantir’s stock was trading at $168.07, down roughly 2% on the day.
Inside Palantir’s latest AI developments
Mizuho analysts recently met with Palantir executives to get a firsthand look at Palantir Ontology, the company’s data integration framework that underpins its platforms. They also reviewed tools such as AI Forward Deployed Engineers, which automate previously manual workflows and extend Palantir’s AI capabilities to a broader user base.
The feedback from Mizuho was largely positive. “Palantir’s recent execution has been stunning,” analysts wrote, referencing the company’s solid performance across both commercial and government sectors.
Palantir has developed a reputation for being one of the most advanced platforms in AI-driven data analytics, especially for clients with large-scale, complex datasets. Though widely regarded as a federal contractor, Palantir has increasingly diversified its business model.
Commercial revenue shows strong growth
While the company’s government contracts — including work with several branches of the U.S. military — remain core to its business, Palantir’s commercial segment is showing accelerating momentum. In Q2 2025, commercial revenue grew 93% year-over-year and 20% quarter-over-quarter, outpacing the company’s government growth, which came in at 53% and 14%, respectively.
CFO Dave Glazer also highlighted a growing trend: individual developers are beginning to adopt Palantir’s platforms at a higher rate. Mizuho described this shift as “an interesting dynamic” that could signal broader adoption within enterprise environments.
“Inbound interest from enterprises continues to rise,” the analysts added, citing recent internal checks.
Valuation metrics raise red flags
Despite these operational successes, Palantir’s current valuation multiples remain extremely high — a key reason for Mizuho’s cautious stance. The firm estimates that Palantir is trading at 105x 2025 EV/sales and 84x 2026 EV/sales, far above typical software industry benchmarks.
“The stock’s multiple remains extreme, dramatically above anything else in software,” the analysts wrote.
They also warned that shares could face a “material multiple reversion” in the coming quarters if growth slows or sentiment shifts.
High pricing may limit future commercial expansion
One of the possible risks flagged in Mizuho’s analysis is pushback from customers over Palantir’s premium pricing. While commercial growth has been impressive, it remains to be seen whether that momentum is sustainable if clients begin resisting cost increases — especially in a tighter economic environment.
This concern is reflected in the firm’s bear-case scenario, which projects deceleration in commercial revenue as customers reassess the value proposition of Palantir’s offerings.
Analysts divided despite strong AI narrative
CEO Alex Karp has remained vocally confident in the company’s direction. On the August earnings call, he dismissed critics and said it was “the perfect time for Palantir.”
Yet Wall Street’s view is more nuanced. According to FactSet data, out of 32 analyst ratings:
- 18 are a Hold,
- 10 are a Buy or equivalent,
- 4 recommend Sell.
This reflects a cautious consensus that, while Palantir’s technology and market position are compelling, its current valuation may already price in much of that optimism.
Palantir continues to stand out in the AI race with innovative tools and growing adoption across both government and commercial sectors. However, concerns around valuation, pricing sustainability, and possible mean reversion in multiples mean that not all analysts are ready to jump in just yet.
For now, many are watching closely to see whether Palantir can convert its technological edge into durable, scalable revenue growth — without alienating clients or overextending its market expectations.
