Michael Burry started betting against Palantir (NASDAQ:PLTR | PLTR Price Prediction) in the fall of 2025, when the stock was one of the loudest momentum trades and every retail account had a screenshot of it. Nine months later, PLTR sits at $132, down 5% over the trailing year and off 21% year to date. Burry has not been fully vindicated. But a stock that treads water for a full year while the business behind it grows 85% is telling you something, and it is roughly what Burry said it would tell you.
What Burry actually said
The trade caught fresh retail attention in early June, when a Reddit post titled “Michael Burry’s Brutal Take On Palantir: ‘A Sand Castle Supported Only By AI Applications Narrative'” ran up 402 upvotes and 159 comments in r/stocks. Sentiment on the ticker cratered into very bearish territory (scores of 18 to 22) for two straight days. Before that, on May 19 and 20, r/wallstreetbets had been posting sentiment scores of 88 with nearly 3,000 upvotes in a single window. The mood flipped inside of two weeks.
Burry’s argument, per his Scion Asset Management disclosures and public commentary, was that at north of 180 times earnings, the multiple is carrying the valuation, and the multiple compresses first when the AI narrative cools.
The business is fine. That is the problem.
Palantir’s Q1 2026 was the kind of quarter that used to send the stock up 20% overnight. Revenue of $1.63 billion, up 84.7% year over year beat estimates. U.S. commercial revenue rose 133% to $595 million. GAAP operating income hit $754 million, a 46% margin. Full-year guidance was raised to $7.65 to $7.66 billion, implying roughly 71% growth.
CEO Alex Karp took a victory lap on the call, saying “Palantir’s Rule of 40 score has soared to 145%. We have shattered the metric, a feat matched only by other fellow AI infrastructure companies. NVIDIA, Micron and SK hynix are the others.”.
He is not wrong. Yet on the day of that filing, the stock closed at $144.45, well below where it traded at the Q3 2025 report ($198.32). You can find the full press release on the SEC’s site. Growth accelerated. The stock went down. That is textbook multiple compression, and it is the specific mechanism a valuation short is designed to catch.
Early but directionally right
Was Burry right? Partially. If he shorted in the fall of 2025 near the highs, the position has almost certainly worked. If he added on the way down, less so. He has not publicly claimed to have closed it or booked a specific number.
What we do know is that the froth has come out. Insider activity shows net selling across 70 recent transactions. Polymarket’s July monthly price target market puts the most likely close around $138 (80% probability), not $200. Retail sentiment on Reddit has drifted to neutral (scores of 50) with very low activity through early July. The stock is no longer the argument it used to be.
What to do with a rationally priced hype stock
The P/E sits around 150x. Analyst consensus target is $183.12 with 20 buys, 10 holds, and 2 sells. Those two numbers can both be true and still leave a retail investor in a weird spot. If Palantir grows into the multiple, you are buying a great business at a fair-ish price for the first time in years. If it does not, another year of flat-to-down price action is the base case, and the bear thesis simply keeps playing out in slow motion.
Burry’s short worked without a crash. That is the quiet way valuation shorts pay off. The mechanism was quiet: a great company growing into a stock that already priced in the greatness. Watch the next two quarters. If U.S. commercial growth stays above 100% and the multiple keeps compressing, the bulls have their answer. If growth decelerates even slightly from here, Burry’s sand castle line ages very well.
Contact [email protected] for any questions or corrections.
Top Gaining Stocks
Top Losing Stocks