Key Points
Palantir recently secured a $300 million deal with the U.S. Department of Agriculture, highlighting its varied growth opportunities.
The U.S president even boasted of its capabilities.
The stock's high valuation, however, may be weighing it down of late.
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After multiple years of strong gains, Palantir Technologies (NASDAQ: PLTR) stock is finally slowing down. Since the start of 2026, it has declined by 19%, which is far worse than the S&P 500's gains of more than 4%.
However, it wasn't all that long ago that the data analytics stock was trading at more than $200. And it's still growing at an impressive pace, continuing to lock up more deals along the way. Investors appear to be torn on the stock of late, which has been more volatile than usual. What's more likely to happen this year: Palantir's stock getting back to $200, or falling to $100?
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New deals, even praise from Trump, haven't been enough to give Palantir's stock a big boost
What I find particularly telling about Palantir's stock these days is the seeming lack of excitement around it. Recently, U.S. President Donald Trump talked about how great Palantir's software was, asking doubters to "ask our enemies." Palantir also announced a $300 million agreement with the U.S. Department of Agriculture, which will help manage farmland, highlighting the versatility of its software and its vast growth potential.
However, even with these recent developments, the stock hasn't been taking off. The social media post from Trump did appear to help the stock recover after hitting a recent low of around $122, but it's still down big this year. It could be indicative of how apprehensive investors may have become with the stock due to its inflated valuation; Palantir's price-to-earnings multiple is well over 200.
More of a decline could be coming for Palantir's stock
Palantir reports earnings early next month, but nothing short of a stellar performance that blows past analyst estimates is likely to rally the stock. The difficulty is that at such a high valuation, expectations are going to be incredibly high for the company, and unless it proves that they are justified, there may be a greater decline to come for the stock in the weeks ahead.
Not only is it expensive from an earnings perspective, but Palantir also trades at around 80 times its trailing revenue. It's a pricey stock to own based on many metrics, even long-term ones, with its price-to-earnings-growth (PEG) multiple at nearly three; investors look for a PEG multiple to be less than one for a top growth stock.
While I wouldn't rule out the possibility of speculators driving Palantir's stock back up to $200 this year, I think the more probable scenario is that it falls below $100, as its valuation has been inflated for quite some time and a correction is long overdue.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
