U.S. stock speculation heat indicator: AI popular Palantir plummets 9%, five consecutive declines, cumulative drop of 15%

Palantir's stock price fell more than 9% on Tuesday, marking the fifth consecutive trading day of decline, continuing the trend of retreating from its historical high.

Data shows that Palantir has dropped over 15% in the past five trading days. Earlier this month, the company reported impressive earnings, which once drove the stock price to a historic high. This earnings report indicated that Palantir achieved over $1 billion in revenue for the first time in a single quarter.

The stock price drop on Tuesday coincided with a pullback in the overall U.S. stock market. So far, Palantir is the best-performing stock in the S&P 500 for 2025, with a cumulative increase of over 100% this year.

Since its IPO in 2021, Palantir's stock price has soared nearly 2500%. Amid the ongoing AI boom, Palantir has secured numerous government contracts due to reforms in government agencies pushed by former U.S. President Trump.

Media reports state that Palantir's strong performance has placed it among the top ten tech companies and the top twenty most valuable companies in the U.S., but its stock price has also become exceptionally expensive. Its forward price-to-earnings ratio has surged to over 245 times.

In contrast, Microsoft and Apple's price-to-earnings ratios are close to 30 times, with quarterly revenues significantly higher than Palantir's; Meta and Alphabet maintain price-to-earnings ratios in the low 20s.

A previous article from Wall Street Insight stated that analysts estimate Palantir needs to generate $60 billion in revenue over the next 12 months to reach a valuation level comparable to its peers.

Media reports indicate that the number of analysts giving the stock a sell or hold rating is more than double those giving it a buy rating, reflecting a general sense of unease on Wall Street. Nevertheless, investors worried about missing further upside opportunities still choose to hold the stock.

Among them, Mark Giarelli from Morningstar Investment Services has given the stock a sell rating, stating:

"Palantir is becoming a difficult valuation story to sell."

Additionally, a previous article from Wall Street Insight reported that Andrew Left, founder of Citron Research, announced in an interview that he is shorting the big data company Palantir, believing the company is "far beyond the realm of overvaluation."

Left emphasized that he does not dislike the company and even likes Palantir CEO Alex Karp, but based on valuation metrics, the stock is clearly overvalued.

Left believes that the stock "needs to get to $40 or $50 to be considered truly cheap," indicating that there is still over 70% downside potential. However, he also acknowledged that the stock price may continue to rise, and he does not expect to perfectly predict the top every time