Palantir (PLTR) shares are falling in morning trading Tuesday after a senior JPMorgan strategist issued a bearish note on the data analytics firm.
According to Dubravko Lakos-Bujas, the Denver-headquartered firm runs the risk of steep decline in the second half of 2025 as it’s a high-beta, momentum-driven name that’s super “overcrowded” at writing.
Palantir stock has been in a sharp uptrend over the past three months and is currently up more than 100% versus its April low.
In his research note, Lakos-Bujas said positioning in PLTR shares has soared from 25th percentile to the 100th percentile within three months only, the fastest increase in about 30 years.
This “extreme crowding” suggests nearly everyone who wants to own the stock already does. In such cases, even minor negative news can trigger a sharp selloff, as there’s little fresh buying to support prices.
Combined with sky-high valuation (well over 400x forward earnings), Palantir stock looks highly vulnerable to momentum reversal and profit-taking at current levels.
In short, shares of the AI-enabled software giant are priced for perfection, and perfection rarely lasts.
Financially, the data analytics company is doing rather well, with estimates for per-share earnings pegged at $0.08 a share for the current quarter, indicating well over 150% growth on a year-over-year basis.
Still, the JPMorgan strategist sees PLTR stock’s valuation as disconnected from fundamentals as it has gone a bit too far.
According to him, investors should consider pulling out of Palantir shares following its meteoric run as “it’s not supported by bust-to-boom recovery in business cycle/fundamentals or significant easing in monetary/fiscal policies.”
Therefore, the AI stock will likely fail at sustaining its outperformance over multiple quarters, he concluded.
Other Wall Street analysts, much like Dubravko Lakos-Bujas, recommend caution in buying PLTR shares at current levels.
According to Barchart, the consensus rating on Palantir stock currently sits at “Hold” only with the mean target of about $107 indicating potential downside of as much as 30% from here.
