Are Investors Done With Palantir? Here’s Where Is What’s Next

Palantir (NASDAQ:PLTR) stock has been the hottest name this year, overtaking even Nvidia (NASDAQ:NVDA) at one point, in terms of publicity. However, things have been getting slower in recent months.

And don’t get me wrong, Palantir stock is up 17.2% in the past month. That’s more than the S&P 500 has returned year-to-date. But if you zoom out back to August, Palantir stock is down over 2% from those levels.

So what’s going on? Are the bulls done carrying Palantir higher and higher until it reaches that $1 trillion target by Wedbush this August? Let’s dig a little deeper to see where it can go next.

How the market sees Palantir stock today

It’s no secret that Palantir is among the most expensive names Wall Street has seen since the Dot Com bubble. Such valuations are almost unheard of when you discount smaller companies. In the same vein, expanding the earnings multiple from here is going to be an uphill battle.

Palantir managed to fight its way upwards by posting one stellar earnings beat after another. In Q2 2024, it beat revenue estimates by 3.99%, with a 3.17% beat the next quarter, and a stellar 6.65% beat to finish off the year. 2025 started with a 2.44% beat, with Q2 2025 revenue beating estimates by 6.79%. EPS has been beating estimates by double digits.

The side effect is that the market may have gotten desensitized to these earnings beats. The earlier surge is likely priced in these earnings beats in advance, and Wall Street seems to be waiting for more clarity before paying more for the stock.

But for Palantir stock to go up, the Street doesn’t have to pay more.

How Wall Street values Palantir stock

Palantir stock is looked at as exceedingly expensive, which it is. But investors may be looking at the wrong metric. The price-earnings ratio of over 607 times (as of this writing) can look very scary.

When you move past that and look at the free cash flow instead, you’re actually paying ~254 times trailing free cash flow and ~216 times forward 2025 FCF (higher end of guidance). This is a multiple that the stock has been holding since around February of this year.

Analysts believe FCF growth will be around 40% next year. If Wall Street holds that premium steady, the stock could follow that FCF trend. If you estimate with the current PE ratio, the same is the case. Palantir stock may be at around $250 to $265 a year out.

Of course, there’s one glaring problem with this equation, and that is whether or not Wall Street will hold the earnings premium in the first place. It’s looking less likely.

So, are investors done with Palantir stock?

Instead of an overnight slump to its lowest price target of $45, we may see Palantir stock go sideways if it keeps delivering “more of the same”. Its Q3 earnings in November, or a big contract before that, will give the market much-needed clarity.

Palantir stock remains at the mercy of the broader AI hype rally, which I believe still has more verve for at least two or so quarters as interest rate cuts bring out their positive effects. It’s tough to make a guess on how Wall Street may perceive it beyond that. If the labor market does not improve, rate cuts may end up spooking markets like it has historically done.

I’d still buy before the Q3 earnings date. The odds remain in your favor, and I expect Palantir stock to push beyond $200 by year-end if Q3 goes well. With the company on a beat-and-raise cadence and continuously landing contracts from commercial and government clients, that’s very likely to happen.

As such, I do not think the market is yet done with Palantir.