Palantir’s shares had a wild ride last week. They dipped 1.6% on Friday, with a 5.6% drop for the entire week. Investors are scratching their heads over the firm’s steep valuation.

But hey, what’s new? This is Wall Street. Palantir, famous for its AI and data analytics software, saw its stock plummet by 12% on Tuesday. That haircut cost them $35 billion in market cap, all because of slipping international sales. The earnings report got folks talking about whether this tech giant is overvalued.

The rollercoaster continued, though. Midweek, shares rebounded 1.5% on Wednesday and jumped another 7.8% on Thursday. Why? A US-UK trade deal announcement had stocks broadly rallying. Those gains shoveled roughly $24 billion back into its market cap. By Friday, it was at $277 billion, a bit off from the $293 billion high the week before.

Palantir’s influence stretches wide. From helping Mount Sinai in healthcare, Citi in finance, BP in oil, to Stellantis in automaking, they’re everywhere. Yet, the company’s activities in surveillance and defense have rattled some human rights advocates.

Analysts have mixed feelings. RBC Capital Markets and Jefferies are cautious, highlighting that Palantir’s valuation might be risky. They project the shares will drop to $40 and $60. Analyst Brent Thill even called the valuation “irrational.”

Conversely, DA Davidson’s Gil Luria stays neutral, suggesting that if Palantir performs solidly, there’s no reason for the stock to stagnate. Still, those sky-high valuations don’t often stick around. Competitors cracking the code or any hiccup in US federal spending could spell trouble.

In recent years, Palantir stock soared by a whopping 455%. Much of that meteoric rise is thanks to the AI boom. However, according to William Blair analyst Louie DiPalma, Palantir’s revenue growth might slow down by 2025-2026 due to competitive pressures.

Market Moves and Valuations

Palantir’s recent first-quarter earnings showed a 5% decline in international sales. The “headwinds” in Europe are palpable. Since 2023, they’ve struggled to make waves due to a sluggish AI market and Europe’s bid for “tech sovereignty.”

Palantir’s alignment with the Trump administration, especially with its defense contracts, doesn’t jive with all European clients. However, opening doors with more European nations might breathe life into their continental business.

Luria adds, “There’s opportunity if the US clinches similar deals in Europe.” But it’s a big “if.”

Tech and Contracts

Palantir just snagged a $30 million deal with ICE, raising eyebrows over migrant surveillance. Another shiny contract with the US Army, worth $178 million, has them working on AI military trucks.

While these wins boost the stock temporarily, they also fuel debates over ethics and politics.

Stocks can swing wildly, especially with towering valuations. Keep an eye on new developments and contracts.

For more about what’s shaking up the stock market, you can read the latest stock moves.

Laura Bratton from Yahoo Finance keeps tabs on these stories. Follow her on Bluesky or shoot her an email.

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