Palantir Technologies (PLTR +1.57%) has delivered triple-digit gains for shareholders in three consecutive years, but it remains one of the most polarizing stocks on Wall Street.
On one hand, Palantir is growing rapidly and its software has become the standard in enterprise artificial intelligence. On the other hand, Palantir is one of the most expensive software stocks in history. Reconciling those facts is challenging.
Before sharing my prediction about what Palantir's stock price will be in December 2026, I want to discuss the bull-case and bear-case price targets set by Morgan Stanley because I believe they accurately capture the wide range of potential outcomes.
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The bull case: Palantir stock soars 130% to $382 per share
Palantir develops data analytics software for customers in the public and private sectors. Its core platforms integrate information and machine learning models into a decision-making framework called an ontology. Its adjacent artificial intelligence (AI) platform lets clients build large language models into applications and business processes.
In the past year, several independent research organizations praised Palantir. Forrester Research ranked the company as a leader in AI decisioning platforms, listing its current capabilities, growth strategy, and positive customer feedback as key strengths. Similarly, the International Data Corp. ranked Palantir as a leader in AI-enabled source-to-pay software, which optimizes supply chain management.
Palantir reported exceptional third-quarter financial results. Revenue increased 63% to $1.1 billion, the ninth consecutive acceleration, and non-GAAP net income increased 110% to $0.21 per diluted share. The company also raised its full-year guidance, which now says revenue will increase 53% in 2025.
"Palantir is not only delivering the best growth in public company software, but also the best profitability in all of software," according to Morgan Stanely analysts Sanjit Singh and Keith Weiss. "It's hard to find a better fundamental story in software." Their bull-case forecast puts Palantir at $382 per share within a year, which implies about 130% upside from the current share price of $165.
The bear case: Palantir stock falls 50% to $81 per share
Singh and Weiss have also outlined a bear-case scenario in which Palantir stock drops to $81 per share. That implies about 50% downside from its current share price of $165. Any number of negative catalysts could bring about that outcome, from disappointing financial results to opinionated management. But those catalysts ultimately come back to the same problem: valuation.
Palantir currently trades at 102 times sales, which makes it the most expensive stock in the S&P 500 three times over. AppLovin is second with a valuation of 33 times sales. Very few software companies have ever achieved a price-to-sales (P/S) ratio above 100, and none has sustained such a high valuation indefinitely.
In fact, among the 100 largest U.S. software stocks, only seven (excluding Palantir) have ever attained a P/S multiple above 100. All seven stocks eventually crashed after reaching their peak valuation. The best outcome was a 70% decline, and the worst was a 90% decline.
My prediction: Palantir will trade at $200 per share in December 2026
I think Palantir will trade around $200 per share in December 2026. That implies about 21% upside from the current share price of $165. I selected that value because it splits the two extremes discussed in previous sections, and I doubt that either bulls or bears will rethink their stance in the next year.
Put differently, some investors will continue to buy Palantir simply because its software has become the enterprise standard in artificial intelligence. Meanwhile, other investors will continue to avoid (or even short-sell) the stock because it trades at an absurdly expensive valuation that history says is unsustainable.
However, I do think the risk-reward ratio is heavily skewed toward risk, meaning Palantir is predisposed to sharp declines even in the absence of company-specific catalysts. If investors suspect AI spending has become unsustainable, or the market gets bad news about the economy, Palantir could crash. If that makes you uncomfortable, avoid the stock.
