Palantir Technologies (PLTR 1.21%) stock had rocketed more than 100% year to date, as of July 17, reaching a new record high of $154 per share. That brought its total return to 1,680% since the November 2022 launch of ChatGPT, the application widely credited with popularizing generative artificial intelligence (AI).
Here's what investors should know about Palantir and what history says the stock will do next.
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Palantir has a unique ability to help customers operationalize artificial intelligence
Palantir develops analytics platforms that help businesses make sense of complex data. The company says its key differentiator is an ontology-based software architecture. An ontology is a framework that links digital information to real-world assets to uncover cause-and-effect relationships that improve decision-making.
Palantir's artificial intelligence platform (AIP) enhances its core data operations platforms with support for large language models and natural language processing. In other words, AIP lets users apply generative AI to their operations. Management says the product is uniquely positioned to help customers operationalize AI, meaning the software can move prototypes to production more effectively than other solutions.
Several Wall Street analysts have echoed that opinion. Forrester Research recently ranked Palantir as a leader in artificial intelligence and machine learning platforms, awarding AIP higher scores than products from Alphabet's Google and Microsoft. "Palantir is quietly becoming one of the largest players in this market," wrote analyst Mike Gualtieri.
Palantir reported strong first-quarter financial results. Revenue rose 39% to $884 million, the seventh straight acceleration, due to particularly strong sales growth in the government segment. Non-GAAP earnings rose 62% to $0.13 per diluted share. Management cited demand for its artificial intelligence platform as a key driver of its strong performance.
Looking ahead, Wall Street estimates revenue will increase 38% to $939 million and non-GAAP earnings will increase 33% to $0.12 per diluted share when the company announces second-quarter financial results after market close on Aug. 4. But Mizuho analysts, led by Gregg Moskowitz, think Palantir has a good shot at accelerating revenue growth once again.
History says Palantir stock could eventually decline more than 80%
Palantir recently traded at 123 times sales, making it the most expensive stock in the S&P 500 by a wide margin. The next closest company is Texas Pacific Land at 31 times sales. That means Palantir shares could fall 74% and still be the most expensive stock in the S&P 500.
Moreover, very few companies have achieved a similar valuation at any point in the last two decades. I reviewed more than 50 software stocks and found only six others that hit multiples above 100 times sales during that period. All of them eventually fell sharply, as detailed below:
- Snowflake traded at 183 times sales in December 2020. The stock eventually fell 72%.
- Zoom Communications traded at 124 times sales in October 2020. The stock eventually fell 90%.
- Cloudflare traded at 114 times sales in November 2021. The stock eventually fell 83%.
- SoundHound AI traded at 111 times sales in December 2024. The stock eventually fell 70%.
- SentinelOne traded at 106 times sales in September 2021. The stock eventually fell 82%.
- Bill Holdings traded at 103 times sales in September 2021. That stock eventually fell 87%.
To summarize, only six software companies (excluding Palantir) achieved valuations above 100 times sales in the last two decades, and their stocks eventually declined by an average of 81%. Moreover, none of those six stocks have yet reached a new record high, and they're still down by an average of 58% today.
Here's what that implies about Palantir. The stock traded at $154 per share when it reached its peak valuation of 123 times sales on July 17, 2025. Its price will eventually drop 81% to approximately $30 per share if its performance matches the historical average.
As a caveat, past performance doesn't guarantee future results, so Palantir's share price isn't obligated to decline. But there's no denying the stock is very expensive, meaning the risk-reward ratio is skewed to the downside.
Investors should think carefully before buying Palantir at current prices. I think it would be prudent to wait for a better entry point.
