Palantir's Valuation Looks Reasonable Amidst Hype

Palantir Technologies has become a prominent player in the AI sector with its software platforms catering to government agencies and commercial enterprises. The company's valuation appears fairly valued, according to a finance expert with experience at Bloomberg. The expert notes that Palantir's success in the hot AI market is a notable achievement, and its valuation reflects the growing demand for AI solutions.

Palantir Technologies (PLTR) has been a significant player in the artificial intelligence (AI) sector, offering software platforms to both government agencies and commercial enterprises. Despite a recent pullback in stock price, the company's valuation appears fairly valued, according to a finance expert with experience at Bloomberg. The expert notes that Palantir's success in the hot AI market is a notable achievement, and its valuation reflects the growing demand for AI solutions.

Shares in Palantir closed slightly up on Thursday, after declining for six consecutive sessions. The pullback in Palantir stock, along with other developments, has raised questions about whether the boom in AI stocks is winding down [1]. With Thursday's gain, Palantir stock is up about 108% in 2025 but down roughly 18% from its all-time high. The stock closed at $156.18 on Thursday, after dropping over 9% on Tuesday and dipping over 1% on Wednesday [1].

Palantir's Relative Strength Rating stands at 98 out of a best-possible 99, while its Composite Rating is 98, according to IBD Stock Checkup. However, the stock holds a C Accumulation/Distribution Rating, indicating neutral institutional buying and selling activity [1].

The company's performance has been influenced by various factors, including the MIT study on AI projects at large companies, which showed underwhelming results on return on investment. Additionally, short seller Andrew Left, founder of Citron Research, has been betting against further gains for Palantir stock amid its lofty valuation [1].

Meanwhile, Google has joined the race to provide AI services to the US government, offering its Gemini AI tools to federal agencies for just 47 cents per agency through 2026. This pricing strategy undercuts competitors and raises concerns about potential vendor lock-in and future costs [2]. Google's move comes in direct competition with similar offerings from OpenAI, Anthropic, and xAI, highlighting the intense competition in the government AI market [2].

The push for AI adoption in government aligns with President Trump's AI Action Plan, which aims to accelerate the technology's integration into federal operations. The plan also seeks to spur AI development, promote it as an American export, and address concerns about ideological bias in AI models [2].

As the AI race in government intensifies, the long-term implications of these deeply discounted deals remain to be seen. The balance between rapid AI adoption and ensuring fair competition, security, and cost-effectiveness will likely remain a critical point of discussion in the coming years [2].

References:
[1] https://www.investors.com/news/technology/palantir-snaps-losing-streak-amid-questions-ai-boom/
[2] https://theoutpost.ai/news-story/google-undercuts-rivals-with-47-cent-ai-deal-for-us-government-agencies-19390/