Should You Finally Buy the Dip on Palantir?

Quick Read

• Palantir (PLTR) dropped 17% in the past month after being rejected at $200 following a 1,000% gain from December 2023 to late October 2025.

• Palantir’s U.S. commercial revenue grew 121% year-over-year in Q3 while government revenue increased 52%.

• The stock trades at 231 times expected 2025 earnings and 191 times estimated 2026 free cash flow.

• Some investors get rich while others struggle because they never learned there are two completely different strategies to building wealth. Don’t make the same mistake, learn about both here.

Palantir (NASDAQ:PLTR) is down 17% in the past month as of this writing. The stock is trading at prices last seen back in August of this year. For most stocks, this would be normal, but for PLTR stock, it may be a sign that it may be plateauing.

From December 2023 to late October 2025, Palantir has delivered over 1,000% in gains. The number of headlines about this one stock rivaled Nvidia (NASDAQ:NVDA), but there has been a lull ever since Palantir was rejected at $200.

The biggest and most acute disincentive is the increasing doubt surrounding the AI rally. Palantir is one of the few companies spearheading it, and if AI stocks start retreating, PLTR would look particularly ugly. Wall Street won't pay a fortune for this stock if it won't get a fortune in return.

At the same time, interest rate cuts are underway, and bulls think that this is a head fake. The financials show no sign of Palantir slowing down, and if the company keeps accelerating, the stock is unlikely to remain idle.

Let's try to make sense of where we're at with Palantir today.

An AI stock unlike any other

Palantir is not your run-of-the-mill hyperscaler AI company that is spending tens of billions on data centers. It is a pure software company that is genuinely seeing increasing levels of success.

Michael Burry, for example, would argue that the AI market is in a bubble and is on the cusp of collapsing. His argument is that the AI buildout is a one-time phenomenon and GPU depreciation is not being properly accounted for. But even he has little to say about Palantir except its valuation, because the company falls completely outside of that. This is a quality business, and bears have to concede at least that much.

Once Palantir gets its foot in the door with a government agency or a company, it tends to expand rapidly and cover the whole nine yards. That's exactly what we're seeing.

No cracks in the wall

Q3 brought another beat and raise as U.S. commercial revenue grew 121% year-over-year, with government revenue growth at 52% YOY. Full-year guidance was raised to $4.4 billion, with free cash flow guidance up to $2.1 billion. Earnings were essentially perfect and trounced analysts.

PLTR stock still didn't react very positively for two reasons: first, Wall Street has been desensitized to Palantir beating and raising estimates every single quarter. Second, they're already nosebleed levels for the stock.

A Q4 beat is very likely, as analysts have been trailing Palantir's lowball guidance as a baseline. I'd expect ~$4.6 billion in revenue with over $2.2 billion in cash flow.

What's the price for perfection?

The issue with Palantir is that the wall itself comes at a dizzyingly high price. You're paying 231 times the expected 2025 earnings. Even if we take the higher end of 2026 revenue estimates of $7.39 billion, assume a 50% FCF margin, and value it based on that, PLTR stock trades at 191 times 2026's FCF.

You're paying several years in advance and betting that Palantir will deliver dozens of earnings beats on a silver platter.

Just before the AI rally took hold, an analyst on Substack reflected on Cisco (NASDAQ:CSCO) in March 2022.

"...with just $0.36 of net income per share, Cisco traded at 220x earnings. An insane valuation for any company, let alone a large-cap one."

He added the quotes: "If you had picked a price point to sell at any time in the past ten years, you would have been wrong," echoed another from Chase Hambrecht & Quist. "[Cisco] has such an impressive track record of growing … that the financial community isn’t thinking in terms of a multiple of what they’re earning this year, but what they will be earning three or four years down the line."

Palantir is perhaps the closest thing we have to it today.

Should you buy PLTR stock now?

PLTR stock is only investable if you either expect the AI rally to drag on and on for years or if you want to make a swing trade, which you'll exit at the first sign of weakness.

Palantir itself does not need to report a bad quarter for the stock to halve or worse. If the AI rally slows down, which it most likely will at some point in the next few years, things can get very ugly.

As such, I'd refrain from buying more PLTR stock. If you already own a lot of it, it's a good idea to trim and rotate into less pricier names. A 17% discount is significant and you can see 20-30% more upside from here, but it's not worth the massive downside risk.

Why Some Investors Get Rich While Others Struggle

The fact is there are two totally different investment paths you can take right now. And while either can make you some money, choosing the right one at the right time can mean the difference between just getting by and getting truly rich. Most people don’t even realize the difference, and that mistake can be devastating for your portfolio. Whether you’re investing $1,000, or $1,000,000 today, learn the difference and put yourself on the right path. See the report.