Shares of Palantir (PLTR 6.84%) are sinking on Thursday, down 6.4% as of 1:12 p.m ET. The move comes as the S&P 500 and the Nasdaq Composite lost 1.1% and 1.7%, respectively.
The artificial intelligence (AI) powerhouse is seeing its stock fall amid a larger sell-off as investors weigh macro news and stretched valuations in tech.
NASDAQ: PLTR
Key Data Points
October job cuts hit two-decade high
While the government shutdown means no official job numbers from the Bureau of Labor and Statistics (BLS), according to a report from the firm Challenger, Gray & Christmas, job cuts for October totaled 153,074. That's up 183% from September and is the most cuts for the month of October since 2023.
The news is the latest sign of trouble that is making investors rethink the incredible multiples many tech stocks carry, like Palantir's price-to-earnings ratio (P/E) of more than 600.
Palantir's stock is overpriced
While investors can get carried away waiting for the perfect deal and miss opportunities, the reality is that a great company can be a bad investment. It's hard to look at Palantir's current valuation and see it as anything but stretched -- very, stretched, in fact.
With a P/E of 600, Palantir would have to grow its earnings tenfold just to approach somewhat reasonable levels. Even then, it would trade at a P/E nearly twice that of Alphabet. I would avoid Palantir stock.
