Palantir stock’s crashed 26% already in 2026. Time to buy the dip?

One of the notable tech performer in the US stock market over the past few years has been Palantir Technologies (NASDAQ: PLTR). Over the past five years, Palantir stock has more than quadrupled.

Lately, though, things have been looking less rosy. The stock has already lost over a quarter of its value this year — and we are only in the middle of February!

For existing shareholders, that might be ringing some alarm bells. But could this be an opportunity for me, as someone who has never owned any Palantir stock, to buy some?

Valuation looks hard to justify

I do not think so.

I see Palantir as a case study of a share where investors have got giddy about a company’s future potential and may have lost sight of its current performance.

Nobody doubts that the Palantir business is doing well. The company’s latest quarterly results showed year-on-year revenue growth of 70%.

That is impressive, especially considering the expense and complexity of what Palantir is selling. In its most recent quarter alone, it closed 61 deals each worth at least $10m in lifetime revenue. That was alongside many smaller ones.

Net income attributable to common stockholders in the same quarter the prior year had been $79m. This time around it was $609m. That is 770% growth. Wow!

Given such strong results, why has Palantir stock done so poorly this year? In a word: valuation.

Sky-high expectations were already baked into the company’s price. Even now, with its $310bn market capitalisation, Palantir is trading for 207 times earnings. That is far, far too high for my tastes as an investor.

Looking ahead, maybe Palantir could be worth it

One swallow does not a summer make. The latest quarterly results are not necessarily an indication of what to expect in future.

But they do show a company experiencing an enormous demand surge and translating it into earnings growth.

If Palantir could grow its net income by something around that 770% for this year and next, suddenly the prospective valuation may not look so huge.

In fact, the current price could potentially turn out to be a long-term bargain.

I see Palantir as offering a ‘sticky’ product. The more clients use its high-priced offering and seek to justify why, they more likely they may become to use it in future.

With proprietary programming, a very impressive roster of existing clients, and large installed user base, the Palantir growth story may just be starting in earnest.

This one’s not for me

Then again, it may not.

For starters, it remains to be seen whether Palantir is really one of a kind or if rivals can figure out how to offer much the same service at a far more competitive price level.

The company has also attracted controversy thanks to what it does and who it does it for. That can go with the territory of working with governments and militaries, but it does raise a reputational risk.

On top of that, Palantir’s core intellectual property is something of a black box. I do not (and cannot) know what it is, so cannot properly assess what sort of competitive advantage it may offer the business.

So, I have no plans to add Palantir stock to my portfolio despite the recent price crash!