Freedom: Palantir’s rapid growth may fail to meet investors’ expectations

Freedom analysts believe Palantir’s (PLTR) high valuation leaves little room for disappointment in the company’s results. According to the Oct. 28 report “The Downside of the AI Boom,” the enterprise value stands at 37.9x projected 2027 revenue, with expected average annual sales growth of 46.8% in 2026–2028. Even if revenue forecasts are maintained, a valuation decline cannot be ruled out: if the multiple fell to 30x, the enterprise value would decrease by about 21%.

Why analysts are focusing on the valuation

In the report, Palantir is presented within the AI software category. The main emphasis is on the relationship between expected business growth and the price the market is paying for it.

For comparison, the EV/revenue multiple is used — the ratio of enterprise value to annual revenue. A figure of 37.9x means the current enterprise value equals 37.9 times projected annual revenue for 2027.

According to the Bloomberg consensus cited in the report, Palantir’s sales are expected to grow by an average of 46.8% per year in 2026–2028. However, the high valuation makes the stock sensitive to how well actual results live up to these expectations.

Freedom’s scenario: valuation decline with unchanged revenue

Analysts consider a scenario in which Palantir’s multiple compresses from 37.9x to 30x. With the revenue forecast unchanged, this would reduce the enterprise value by about 21%. This scenario shows that a drop in market valuation does not necessarily require a decline in sales. It is enough for investors to pay less for each dollar of expected revenue. At the same time, the calculation relates to enterprise value (EV). It is not a price target for Palantir or a forecast of a 21% drop in the stock. The report contains neither a price target nor a formal “Sell” recommendation.

Palantir remains near its annual high

In the snapshot cited in the report as of Oct. 26, Palantir shares were trading at $198,84 and were 7% below the 52-week high. For analysts, the key question is how well such a valuation aligns with further growth rates. Elevated expectations increase the importance not only of reported results, but also of management guidance.

The Nov. 2 report will be the next key test

In the report’s calendar, Palantir’s earnings are scheduled for Nov. 2. Freedom suggests focusing primarily on the company’s growth outlook. Within the overall risk-assessment framework, the authors highlight two opposing signals. A downward revision to guidance or a contraction in market multiples strengthens the bearish scenario. Growth that consistently exceeds consensus, on the contrary, becomes grounds to reconsider it. Therefore, the upcoming earnings report is important as a test of the expectations embedded in the share price.

Being on the watch list does not mean an immediate sale

Palantir is included on a list of candidates for potential short positions — trades designed to profit from a decline in the share price. However, the authors emphasize that opening such positions requires confirmation of a trading signal, not merely a high valuation.

Freedom maintains a long-term positive view on artificial intelligence. At the same time, the experts believe the technology’s prospects are compatible with short-term risks in individual stocks: investment outcomes depend on the company’s valuation, execution of its plans, and the time horizon of the trade.

This is not an individual investment recommendation.