Palantir Technologies, the artificial intelligence and data analytics powerhouse, has found itself at the heart of Wall Street’s most animated debates this August. After a meteoric run that saw its shares soar over 1,600% in five years and more than double in 2025 alone, Palantir’s stock has become a microcosm of the broader frenzy—and skepticism—surrounding AI-driven companies. This week, the company’s fortunes shifted dramatically, with its shares rebounding sharply after a bruising six-day losing streak, all against the backdrop of changing signals from the Federal Reserve and mounting questions about the sustainability of the AI boom.
Friday morning brought a jolt of optimism for Palantir investors. Shares surged 3.37% to $161.40, according to Benzinga, fueled by Federal Reserve Chair Jerome Powell’s unexpectedly dovish comments at the Jackson Hole symposium. Powell hinted that the Fed “may warrant adjusting policy” if labor market risks intensify, a statement widely interpreted as opening the door to interest rate cuts as early as September. For growth companies like Palantir, whose future earnings are discounted back to the present, lower rates can be a game-changer. As Treasury yields fall, investors become more willing to pay up for companies with long growth runways, since the opportunity cost of holding equities versus bonds diminishes.
“The market is reacting to Powell’s speech,” Benzinga noted, highlighting that the rally wasn’t isolated to Palantir but was part of a broader surge. The Dow Jones Industrial Average rocketed 850 points higher, and the S&P 500 gained over 1.5%, according to The Motley Fool. Palantir, which invests heavily in expanding its artificial intelligence platforms and securing new government and commercial contracts, is particularly sensitive to such macroeconomic shifts. The company’s valuation—already lofty—became even more pronounced as investors recalibrated their expectations for future growth in a lower-rate environment.
But if the market’s mood seemed euphoric, it was also tinged with caution. Just days earlier, Palantir’s stock had tumbled 15% over five trading days, sparking hesitation among investors searching for a bottom. On August 21, the stock managed to eke out a marginal gain, closing at $156.18 and breaking a six-day losing streak, as reported by TipRanks. Despite that, shares remained nearly 18% below their all-time high of $190, reached on August 12, 2025, as Investor’s Business Daily confirmed.
The volatility is not without reason. Palantir’s second-quarter earnings, released on August 4, painted a picture of robust growth: record revenue of $1 billion, up 48% year-over-year, and adjusted earnings of 16 cents per share, beating forecasts. The company even raised its full-year revenue guidance to between $4.142 billion and $4.150 billion, up from a prior range of $3.89 billion to $3.90 billion. Yet, as The Motley Fool’s analyst Sean Williams pointed out, “Valuation is absurd,” noting that 40% of Palantir’s pretax income last year came from interest on its cash—a sign that not all of the company’s profits are coming from its core business.
Indeed, Palantir’s forward price-to-earnings ratio hovers around 245 to 250, dwarfing those of peers like Salesforce (21.7) and Microsoft (32.9). This eye-popping multiple has attracted the attention of skeptics and short sellers. Andrew Left of Citron Research, a well-known short seller, recently told Fox Business, “It’s a wonderful company, but if this was the greatest company that was ever created and we gave it the same multiples, let’s say Nvidia in 2023, the stock still can get cut by two thirds. And that would be like 35 times sales.” Left has gone so far as to peg Palantir’s fair value at $40, arguing that the stock is “detached from fundamentals.”
Such skepticism is echoed in the analyst community. CFRA’s Janice Quek, in a Thursday report, attributed Palantir’s recent slide to a combination of broader market pullbacks and a rotation out of hot information technology stocks. She also pointed to a Massachusetts Institute of Technology study showing underwhelming returns on AI projects at large companies and OpenAI’s CEO cautioning that the current AI boom could be nearing a bubble. “We believe recent developments such as the MIT study on the return on investment of AI and a short seller report questioning Palantir’s valuation amid competition with other AI firms also contributed to the fall. Investors could see more volatility in the short term,” Quek wrote, though she maintained a bullish outlook, arguing that Palantir is “outperforming peers at current growth and acceleration rates, as its solutions attract new customers and drive higher spend from existing ones.”
Despite the pullback, many see reasons for optimism. Piper Sandler, for instance, raised its price target on Palantir to $182 earlier this month, citing strong demand across government and U.S. commercial segments. The firm acknowledged the risks associated with the stock’s high valuation but argued that Palantir’s growth and margin profile warrant a premium. Meanwhile, retail investor enthusiasm for generative AI continues to buoy the stock, even as commercial revenue has yet to fully ramp up.
Not all major investors are sticking around for the ride. Billionaire Stanley Druckenmiller sold all his Palantir shares in the first quarter of 2025, and Cathie Wood offloaded approximately 153,338 shares worth about $28 million in August, according to The Motley Fool. Yet, some seasoned traders remain undeterred. Stephen Guilfoyle, a 30-year Wall Street veteran, recently sold Palantir shares at around $185.60, locking in profits, but told TheStreet Pro he plans to re-enter if the stock pulls back to technical support near $152.30. “I expect the stock to test its 50-day SMA (currently $152.30) from above. I will be a buyer from here on down to that level if the stock plays my game,” Guilfoyle explained, expressing confidence that institutional investors would defend the stock and reiterating a price target of $205.
Palantir’s technicals remain strong despite the turbulence. The stock still trades above its 50-day moving average, with a Relative Strength Rating of 98 out of a possible 99, though its C Accumulation/Distribution Rating signals neutral institutional activity, as reported by Investor’s Business Daily. For those looking to enter the market, fractional shares make participation more accessible, with $100 buying roughly 0.62 shares at current prices. Options and short-selling remain more complex alternatives for those betting against the company.
In the end, Palantir’s story is a reflection of the broader debate swirling around AI stocks: breathtaking growth and sky-high expectations on one hand, and warnings of bubbles and overvaluation on the other. As the Federal Reserve’s next move looms and the AI sector faces its first real test of resilience, Palantir remains a bellwether—its fortunes watched closely by bulls, bears, and everyone in between.
