Will Palantir Crash or Prove the Bears Wrong

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•  01 Feb 2026
 

•   PLTR  
   
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$PLTR is heading into one of its most critical earnings reports yet, and the tension on Wall Street is unmistakable. Just before the company releases its fourth-quarter and full-year 2025 results, RBC Capital Markets is doubling down on a stark warning: Palantir could fall as much as 70%. For a stock that has become one of the most beloved names among retail investors, second only to TSLA, this sets up a high-stakes moment for traders and long-term shareholders alike.

Palantir is expected to report impressive growth. Revenue for the fourth quarter is projected to jump 63% to $1.4 billion, while earnings per share are forecast to rise 64% to 23 cents. On the surface, those numbers reflect strong operational momentum, driven by sustained demand for advanced data analytics and artificial intelligence platforms across both government and commercial sectors. The AI narrative remains powerful, and Palantir has positioned itself as a core infrastructure layer for institutions seeking to operationalize data at scale.

Yet valuation remains the central battleground. RBC maintains an Underperform rating and a $50 price target, implying a potential 70% downside from current levels. According to analyst Rishi Jaluria, the concern is not necessarily about the business disappearing, but about whether the current valuation can be justified without extraordinary execution and significant upward guidance revisions. Compared to the broader software sector, Palantir trades at a premium that assumes sustained hypergrowth and near-flawless delivery.

RBC points to early warning signals. Monitoring of government contract activity suggests a decline in contract value, which could indicate fewer large late-stage deals and potentially softer forward revenue visibility. On the commercial side, there are questions about enterprise durability, with reports that some customers are reassessing or even discontinuing platform usage. In a rapidly intensifying AI market, competition is escalating, and differentiation must be consistently proven quarter after quarter.

At the same time, the bull case is far from dead. Palantir surged 121% over the past 12 months, reflecting massive retail conviction and expanding institutional interest. However, the stock has declined 9% over the past three months, signaling growing tension between momentum-driven enthusiasm and valuation discipline. The risk-reward profile is increasingly asymmetric. Strong results may not be enough; the company likely needs to significantly beat expectations and raise guidance to sustain its premium multiple.

One unique dynamic with PLTR is its relationship with retail investors. Entire online communities are dedicated to the stock. Management has actively engaged with retail audiences, hosting direct discussions and engaging influencers even before traditional analyst outreach. This has created a loyal shareholder base that often views short-term volatility as opportunity rather than threat. That retail support can amplify both rallies and pullbacks, increasing volatility around earnings events.

Historically, Palantir earnings reactions have been unpredictable. In the previous quarter, the company beat expectations with 61% revenue growth, yet the stock declined due to valuation concerns. This pattern reinforces a critical lesson for traders: in high-multiple stocks, expectations often matter more than absolute performance.

Beyond the numbers, Palantir continues to expand strategically. The company maintains deep ties with U.S. government agencies, collaborates with energy and industrial firms, and works with defense systems in Israel and across Europe, including NATO-related initiatives. These relationships underscore its geopolitical and strategic relevance, particularly as AI becomes intertwined with national security and infrastructure modernization.

This earnings report is not just about revenue and EPS. It is about narrative sustainability. Can Palantir prove that its AI-driven growth is durable, scalable, and defensible enough to justify its premium? Or will concerns over slowing contract momentum, enterprise churn, and elevated valuation dominate the conversation?

The coming report will likely define the next major move in Palantir. A decisive upside surprise could reignite momentum and force skeptics to reassess. A disappointment, or even a "good but not great" result, could validate bearish projections and trigger a deeper repricing. In a market that is increasingly selective about growth premiums, Palantir stands at a crossroads.

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