Palantir (PLTR) is riding a violent wave of investor sentiment in 2025. The data intelligence company shattered expectations by posting its first-ever $1 billion quarterly revenue in Q2, fueled by explosive growth across its government and commercial divisions.

Yet, in a stunning reversal, the stock has plummeted for six consecutive sessions, wiping out over 20% of its value and erasing its recent all-time high. This dramatic swing highlights the fierce battle between bulls celebrating monumental growth and bears fearing an unsustainable valuation.

Q2 Earnings Shatter Every Expectation

Palantir didn’t just beat estimates; it obliterated them, delivering a report that cements its high-growth status.

• Revenue surged to $1 billion, marking a 48% year-over-year leap.
• Government contracts propelled a 53% increase in that sector.
• The U.S. commercial business exploded, soaring 93% as companies adopted its AI platforms (AIP).
• The company generated a staggering $568 million in free cash flow, achieving a 57% margin.
• Its 94% Rule of 40 score demonstrates elite mastery of balancing growth and profit.

Bolstered by this performance, management raised its full-year revenue guidance to $4.14–$4.15 billion.

The Market Pushes Back: Forces Driving the Sell-Off

Despite the stellar results, several powerful forces are hammering the stock price:

1. Valuation Concerns Slam the Stock: Critics attack Palantir’s extreme valuation, which trades between 200–276x forward earnings. This dwarfs the S&P 500’s average of 22x and prices in near-perfect execution for years.
2. A Short-Seller Declares War: Citron Research set a target of $40 per share, calling the valuation “completely detached from reality” and triggering a wave of fear.
3. Analysts Remain Sharply Divided: The analyst community is locking horns, with only a handful maintaining “buy” ratings amid widespread caution over its sky-high price.
4. A Broad Tech Sell-Off Accelerates the Fall: Palantir got caught in a market-wide retreat from high-flying AI stocks, as investors flee what they see as an overinflated sector.

Bulls Stand Their Ground: The Case for Recovery

Long-term believers are holding firm, pointing to undeniable strengths:

• Piper Sandler champions the stock with an “Overweight” rating and a $170 price target, calling Palantir a “secular winner” in AI.
• The Q2 report proves the growth narrative is not only intact but accelerating, driving intense retail and institutional interest.
• Its deep entrenchment in U.S. defense and intelligence secures a powerful, stable revenue base funding its commercial expansion.

The Final Verdict: A High-Stakes Battle

• Short-Term: Expect white-knuckle volatility. The stock is reacting to emotion and valuation fears. Even strong news may trigger profit-taking.
• Long-Term: The investment thesis rests entirely on your conviction. If you believe Palantir will dominate the AI-powered future of data analytics, this crash presents a potential entry point. However, understand that the stock’s premium demands flawless execution and leaves no room for error.