Palantir Stock “Priced for Perfection,” Says Pro. But Here’s Why It’s Not Time to Sell

Shares of Palantir (NASDAQ:PLTR | PLTR Price Prediction) took a major hit on Thursday, plunging by more than 7% alongside the broader software scene, which is increasingly nervous about the AI impact following Anthropic’s latest AI model, Claude Mythos, which is so powerful that it’s only going to be released to tech firms.

Now, it seems like Palantir stock should be spared on days like this, given it’s winning the AI software wars. But with Dr. Michael Burry, who’s hanging onto his bearish bets on the firm, recently implying that Anthropic could disrupt even Palantir with its “easier, cheaper, and more intuitive” solution, it might be wise for the Palantir bulls to take pause as the stock quickly becomes a fast-falling knife. 

Should Palantir shares be priced more like an AI disruptor? Or is it actually on the receiving end as AI upends the software scene?

It’s hard to tell, especially if you bought Palantir based on its momentum. Indeed, Palantir and Anthropic have a partnership in place, but how long before Dario Amodei’s powerful AI firm steps on the toes of Alex Karp and Palantir?

It’s tough to tell. Frenemies have become quite common in this phase of the AI revolution. And while Palantir has been one of the biggest early winners in the AI boom, it’s hard to tell where the firm and the stock go from here, as Anthropic and other model makers continue to release disruptive tools.

Though everyday consumers probably won’t be able to get their hands on Claude Mythos anytime soon, given the risks, I certainly envision a scenario where such a model begins to take a bit of wind off the back of Palantir’s AI Platform (AIP). Has Palantir AIP finally met its match?” I guess we’ll have to wait and see. Dr. Burry might be a genius, but he’s not right every time.

As to whether Anthropic can really take share from Palantir, though, remains the big question. Personally, I’m not interested in paying a price-to-earnings (P/E) multiple of more than 200 times for any company, even if it’s the growthiest AI software play in the world. As Anthropic and other AI firms move in, my guess is that Palantir will face new competition. And it might not take all too long before Wall Street pros lower the bar on the stock.

This analyst thinks the stock is expensive, and he’s not the only one

Apart from Burry, one sell-side analyst named Yi Fu Lee over at Benchmark started Palantir stock with a hold rating and a $150 price target (wouldn’t it be a buy if the target implies a gain of more than 15%?). Lee believes the stock is “priced for perfection” and that there’s “little to no room for margin of error.” I couldn’t have said it better myself. What I want to know, though, is what models, like Mythos, could mean for Palantir’s dominance.

Until there’s more clarity on the next step, perhaps holding off is the best way to go. Some of the more bearish analysts covering the name see the stock dropping back to the double-digits. And while such a decline would likely enrich Burry, I would be careful betting against the name, especially since AIP is a growth engine that has yet to stall.

Is Palantir’s moat wide enough?

Arguably, Palantir’s tech is an AI operating system that might not be all too easy to disrupt, even with the most advanced AI in the world. Of course, I could be wrong, given how fast things are changing in AI. Either way, Burry’s bet goes against much of Wall Street. And until the signs of a slowdown hit the numbers, I wouldn’t bet against Palantir stock.

I think much of the damage has already been done after Thursday’s stretched pullback. Now down 37% from its highs, it seems like the market isn’t sure if Palantir is the disruptor or the disrupted. And with a sky-high multiple, that’s just the right formula for pain.