Is PLTR a good stock to buy? We came across a bearish thesis on Palantir Technologies Inc. on Monopolistic Investor’s Substack by Antoni Nabzdyk. In this article, we will summarize the bears’ thesis on PLTR. Palantir Technologies Inc.'s share was trading at $150.95 as of March 15th. PLTR’s trailing and forward P/E were 239.60 and 125.00 respectively according to Yahoo Finance.

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Palantir Technologies (PLTR) is a data analytics software company that has carved out a specialized niche in complex, high-security data environments, primarily serving government and large commercial clients. Founded in 2003, Palantir’s software enables organizations to analyze massive datasets securely, with its Apollo platform allowing deployment both on-premises and via cloud providers like AWS and Google Cloud.

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Approximately 55% of revenues come from government contracts, while 45% are commercial, and 66% of revenue is U.S.-based, with international clients contributing the remainder. The company’s commercial expansion through its AIP segment shows promise, with subscription and licensing models replacing traditional custom solutions, creating long-term contracts, high switching costs, and strong customer retention. Its top 20 clients generated $64.6 million in revenue on average in 2024, up 18% from the prior year, and total future contract value stands at $5.4 billion over an average of 4.7 years.

Despite these strengths, Palantir faces significant risks that make the stock unattractive at current levels. Stock-Based Compensation accounts for 24% of revenue, inflating operating cash flow and masking the true Free Cash Flow, which would drop from 40% to 16% if adjusted for dilution. While gross margins are high at 80%, operating margins are modest at 10.8%, and the company relies heavily on human-intensive deployment, limiting scalability.

Revenue concentration is also notable, with the top three customers representing 17% of revenues, and while contracts are long-term, pricing power remains constrained by client bargaining leverage. A discounted cash flow analysis using conservative growth assumptions yields a fair value of $21 versus a current market price of $176, indicating substantial overvaluation.

Given these factors, Palantir’s business is operationally strong and strategically positioned, but the excessive valuation, reliance on shareholder-dilutive compensation, and high execution risk make the stock unattractive for investors seeking a margin of safety with bearish tone due to its overvaluation.

Previously, we covered a bullish thesis on Palantir Technologies Inc. (PLTR) by Deep Value Returns in May 2025, which highlighted the company’s strong AI and data analytics leadership, robust growth, and long-term value creation despite short-term volatility. PLTR’s stock price has appreciated by approximately 38.66% since our coverage. Antoni Nabzdyk shares a contrarian view but emphasizes the risks of high stock-based compensation, revenue concentration, and overvaluation, making the current price unattractive.

Palantir Technologies Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 89 hedge fund portfolios held PLTR at the end of the fourth quarter which was 81 in the previous quarter. While we acknowledge the risk and potential of PLTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR and that has 10,000% upside potential, check out our report about this cheapest AI stock.

Disclosure: None.