Palantir’s Summer of Contradictions: Record Contracts, a CEO Feud, and a Stock Going Nowhere

Palantir’s shares ended the week at €111.02, down 1.7% on Friday and 1.12% lower over the past seven days. Since the start of 2026, the stock has shed 22.42% of its value, leaving it 38.32% below the 52-week high of €179.98 reached on November 3, 2025. Yet the company is coming off a quarter in which revenue surged 84.7% to $1.63 billion, it recently locked in a $10 billion U.S. Army contract, and its CEO is making headlines by picking fights with the biggest names in artificial intelligence. The disconnect between operational momentum and market reception has rarely been starker.

The immediate headwind for the stock is a sector rotation that has favoured AI hardware over software through the first half of 2026. Capital flowed heavily into semiconductor names, leaving platforms like Palantir in the shadows. That pattern is now showing signs of reversing, as investors slowly rotate into software laggards with AI exposure. Palantir’s share price has become a sentiment gauge for this shift — less a referendum on the company’s own execution than a bet on whether software will finally catch up after the hardware rally.

Strong operational hand, heavy valuation baggage

Palantir’s financial performance offers little reason for doubt. In the fiscal first quarter, U.S. commercial revenue jumped 133% to $595 million, pushing the overall top line to $1.63 billion. The adjusted operating margin widened from 44% to 60%, and management raised full-year guidance to 71% growth. The remaining deal value in the U.S. commercial business reached $4.92 billion, up 112% from a year earlier.

In the government sphere, the company’s anchoring runs deep. On July 31, 2025, Palantir secured a $10 billion, ten-year enterprise agreement with the U.S. Army. The Gotham platform has been embedded in intelligence and military workflows for over a decade, and the Maven Smart System now links sensor data, targeting, and command decisions across multiple combatant commands. The resulting switching costs are formidable.

CEO Alex Karp has been leveraging that strength to position the company as a defender of customer data sovereignty. In a combative CNBC appearance on July 1, he called the token-based pricing models of OpenAI and Anthropic “completely crazy,” arguing that they allow AI vendors to unilaterally capture the value of client data. The remarks sparked a broader industry debate — David Sacks and Satya Nadella weighed in — and the stock rose 8% to 9% that day. Palantir also published a 15-point position paper titled “Institutional Sovereignty in the Age of AI” and expanded its partnership with Nvidia to build open-source AI systems for government customers based on Nemotron models.

Should investors sell immediately? Or is it worth buying Palantir?

Yet none of that momentum has lifted the stock above €120. The market is fixated on the price tag. Wolfe Research rates the shares Neutral, citing a trailing price-to-earnings ratio of 176 and a price-to-sales ratio of 71.83. Even on a forward basis, the multiple of roughly 81 to 91 towers over the software sector average of about 29. D.A. Davidson’s Gil Luria upgraded to Buy with a $175 price target, arguing that Palantir is growing twice as fast as peers such as Snowflake, Shopify, Datadog and CrowdStrike, but the valuation debate remains sharp.

Shadows on the horizon

Three specific risks are keeping cautious investors on edge. First, the $440 million contract with the UK’s National Health Service is up for renewal in early 2027, with no guarantee of extension. Second, regulatory filings revealed that Michael Burry’s Scion Fund holds put options on 5 million Palantir shares, representing a notional value of roughly $912 million — a clear vote of conviction that the stock is overvalued. Third, signs of corporate belt-tightening on AI spending are emerging: Uber has capped employee AI tool expenses at $1,500 per month, a concrete example of the very pricing sensitivity Karp is trying to attack.

The chart reflects a stock in limbo. Palantir is trading 3.27% below its 50-day moving average of €114.78 and 16.90% below the 200-day average of €133.60 — a configuration that still reads as a medium-term downtrend, even if the pace of decline has slowed. The relative strength index sits at 48.8, firmly neutral, while the annualized 30-day volatility of 53.07% confirms that sharp swings, not quiet drifting, define this name.

The average analyst price target of €160.38 implies upside of roughly 44.5% from current levels. Achieving that would require one of two scenarios: either Wall Street’s growth thesis is proved right as the valuation squeeze reverses, or the market is already discounting execution risks that analysts have not fully baked in. For now, Palantir’s fate hinges less on its own quarterly beats and more on whether the rotation back into software that investors have been flirting with finally takes hold. The pieces are in place — record revenue, a decade-long government anchor, and a CEO willing to stir the pot. The market, however, is not yet convinced.