The 3 Things Spooking Investors On This AI Giant

Is this AI Powerhouse Losing Steam or Just Taking a Breather?

Few companies stir up as much investor excitement—and controversy—as Palantir Technologies. From its deep roots in defense contracts to its aggressive push into artificial intelligence, Palantir (NASDAQ:$PLTR) has become a market darling, but not without its fair share of turbulence.

As of February 20, 2025, the stock is soaring, insiders are cashing out, and Washington’s budget cuts are looming. Is Palantir ($PLTR) a long-term winner or a ticking time bomb? Let’s break it down.

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Palantir’s 2025 Rally: A Market-Beating Start to the Year

Palantir has been on an absolute tear in 2025. The year kicked off with shares trading at $75.63, and by mid-February, they exploded to an intraday high of $125.41—a jaw-dropping 65% gain in less than two months.

Even after a recent pullback, the stock is still up 48% year-to-date, closing at $112.06 on February 20. That kind of performance makes even seasoned investors sit up and take notice.

But here’s the catch—stocks don’t go up in a straight line, and Palantir is facing some serious headwinds that could challenge its gravity-defying run.

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The AI Explosion: Palantir’s Growth Engine

The biggest driver behind Palantir’s rally? AI.

Palantir isn’t just dabbling in artificial intelligence—it’s going all-in. The company’s AI-driven platforms have become mission-critical for both government and enterprise clients, helping them analyze vast amounts of data with precision and speed.

The numbers don’t lie:

• Q4 2024 revenue jumped 36% year-over-year to $828 million.

• Adjusted earnings surged 75%, crushing Wall Street expectations.

• 2025 revenue forecast: $3.74 billion to $3.75 billion, signaling continued strong demand.

CEO Alex Karp isn’t shy about the company’s dominance, recently stating:

“A software juggernaut has indeed emerged.”

Investors are buying into the hype, but at what cost?

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Sky-High Valuation: Justified or a Red Flag?

With a $280 billion market cap, Palantir is trading at a lofty price-to-sales multiple that dwarfs industry averages. The market is clearly betting big on future growth, but can Palantir keep up the momentum?

Not everyone is convinced.

• Deutsche Bank and Mizuho both downgraded the stock, warning that its current valuation leaves little room for error.

• If revenue growth slows, even slightly, Palantir’s stock could take a hit.

High expectations mean high risk. And speaking of red flags…