Palantir's Business Is Booming. So Why Has the Stock Dropped by More Than a Third?

Despite Palantir's strong business fundamentals—including 85% revenue growth, 130% surge in commercial revenue, and 46% operating margins—the stock has fallen 37% from its November 2025 peak. The decline reflects a valuation reset rather than business deterioration, as investors have become less willing to pay extraordinary premiums for AI stocks. The company's P/E ratio of 146 remains elevated, illustrating that stock performance and business performance don't always move in tandem.