Six consecutive days of gains had pushed Palantir shares roughly 24% higher, returning the stock to a market cap above $300 billion. Then the rally hit a wall. Whispers about Michael Burry—the investor famous for betting against the housing market in 2008—building short positions against several high-profile AI names sent the stock sliding 4% on Wednesday. Whether Palantir is actually among Burry’s targets remains unconfirmed, but the rumor was enough to rattle a sector already wrestling with elevated valuations.
The pullback undid part of the momentum sparked by Palantir’s late-June partnership with Nvidia to run AI models for U.S. government agencies and critical infrastructure in sovereign environments. That deal had reinforced the narrative that Palantir is cementing its role as a bridge between cutting-edge artificial intelligence and the defense establishment. Yet even as the company churns out eye-catching growth numbers, the market is demanding proof that the commercial engine can sustain its blistering pace.
US Commercial Growth: The Make-or-Break Metric
In the first quarter, Palantir delivered what management called a record quarter. U.S. commercial revenue more than doubled year over year, surging 104%, while total revenue climbed 85%. Buoyed by those results, the company raised its full-year outlook and now expects U.S. commercial turnover to exceed $3.2 billion, implying growth of at least 120%. That target has become the central battleground for investors.
Optimists argue that Palantir is still in the early innings of enterprise AI adoption, and that the current drawdown—the stock is down roughly 23% year to date in dollar terms and about 19% in euro terms—represents a buying opportunity. The analyst consensus supports that view: the average price target sits at $174.10 per share, with the majority of ratings at Buy. DA Davidson upgraded the stock to Buy on July 2 with a $175 target, and Rosenblatt Securities reiterated its Buy rating and $225 target. The gap between today’s price and those targets is roughly 45%, a spread that could close quickly if the second-quarter numbers confirm the trajectory.
Short Rumors and Political Headwinds
Burry is not the only potential thorn in Palantir’s side. A Financial Times report highlighted growing political risk tied to the company’s close relationship with the Trump administration. If Democrats regain investigative powers in the House, Palantir’s federal contracts could face renewed scrutiny. The company’s government business, however, remains robust: in the 12 months after Trump took office, Palantir booked nearly $2.2 billion in federal revenue, up 65% from the prior period. The commercial side has more than doubled over the same stretch.
Should investors sell immediately? Or is it worth buying Palantir?
Broader market dynamics added to the pressure on Wednesday. After a fragile U.S.-Iran ceasefire collapsed, the entire software sector took a hit. Workday fell 4%, SAP dropped 3.4%, Oracle lost 2%, and ServiceNow slid 3.6%. Palantir’s decline was in line with that group, but the Burry-specific chatter gave it an extra edge.
Valuation and Technical Signals Flash Caution
For skeptics, the math is hard to ignore. Palantir trades at one of the highest price-to-sales multiples in the technology sector, a figure that looks even steeper after the recent run-up. The chart tells a similar story: the stock remains below both its 200-day and 100-day moving averages, while barely holding the 20-day line. In euro terms, Wednesday’s closing price of €115.72 sits 13.6% under the 200-day average and just 0.6% above the 50-day mean. A death cross formed back in February continues to exert technical weight.
Volatility adds another layer of risk. The annualized 30-day reading is around 60%, and the 52-week range of €93.30 to €179.98 underscores how violently the stock can swing. The RSI stands at 48.6, a neutral level that offers little directional guidance. “It’s a stock that can spike or slide 5% on a stray tweet,” one trader noted.
The Countdown to August
All eyes are now on the second-quarter earnings report, expected in early August. Palantir will need to show that U.S. commercial revenue growth is not only hitting the 120% target but doing so with sustainable margins. Earnings per share are forecast to jump to $0.33 from $0.16 a year ago, on revenue of $1.81 billion versus $1.0 billion. If the numbers deliver, the stock could test the resistance zone around €133, roughly the level of the 200-day moving average. A miss, however, could trigger a sharp sell-off, given the premium already baked into the price.
Beyond the quarterly print, the political narrative will keep percolating. The combination of Burry’s hypothetical shorts, potential Democratic oversight, and the inherent volatility of a stock with a 55%–60% annualized vol means that Palantir investors are unlikely to get much quiet time this summer. For bulls, that is exactly the point: the current uncertainty offers an entry before the next leg of the AI revolution. For bears, it is a reminder that even explosive growth does not always justify the world’s richest software valuation.
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