Key Points
Palantir's stock is priced to perfection, which can make it difficult for it to wow investors.
Investors have been pivoting away from expensive and risky stocks this year in search of safety and stability.
- 10 stocks we like better than Palantir Technologies ›
Palantir Technologies (NASDAQ: PLTR) stock is struggling in 2026. Although the business itself remains in great shape, investors aren't buying it up as rapidly as they were last year. As of Monday's close, the data analytics stock has fallen by 20%. While the stock market has been a bit shaky, the S&P 500 is still in positive territory, up around 2%.
What may be puzzling to Palantir investors is that it's doing so poorly, even as the company posted strong quarterly results, yet again. Why is the stock struggling, and what does this mean for investors?
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Palantir's strong results may already be priced into its valuation
When Palantir released its latest quarterly numbers earlier this month, it was what investors and analysts have come to expect from the stock by now: another solid earnings beat and promising guidance. It beat on the top and bottom lines. Its guidance was higher than what analysts expected, and CEO Alex Karp yet again pumped up the results, calling them "indisputably the best results that I'm aware of in tech in the last decade."
The trouble is that may already be what investors have come to expect from the tech stock. It is, after all, priced at a whopping 216 times its trailing earnings -- a steep valuation by any stretch. For that kind of a premium, investors arguably already expect the company to continually beat expectations, and for its CEO to talk about how great the business is doing and how unstoppable it is. Unless the company significantly raises the bar, it just might not be enough to give the stock a boost.
Is there simply less appetite for risk in the markets?
Although Palantir isn't a risky business given its solid profits and growth, its stock is risky due to its high valuation. And one trend that's been undeniable this year is the shift away from risky holdings and toward safer investments. Not only is Palantir down big this year, but leading cryptocurrency Bitcoin is also down around 20%.
Meanwhile, gold and silver have hit record highs. And of all things, dividend stocks are in play. The iShares Core High Dividend ETF is up 13% and is easily outperforming Palantir this year. It appears as though investors are simply moving away from high-priced stocks and risky investments into safer options, especially amid plenty of economic uncertainty these days.
Palantir may be a solid company with strong financials, but that doesn't mean its stock is going to keep climbing in value. And even though it's down big already this year, I wouldn't be surprised if it fell further, as this is still a very expensive stock to own.
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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin and 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.
