Keith Noonan, The Motley Fool

Fri, Jun 27, 2025, 9:53 AM3 min read

• Palantir stock is pulling back in Friday's trading after setting a new record high yesterday.

• Investors are taking profits after a strong bull run, and some may be reacting to the latest Department of Defense budget request.

• Palantir trades at a highly growth-dependent valuation, but the company has big strengths in crucial areas of the AI market.

• 10 stocks we like better than Palantir Technologies ›

Palantir (NASDAQ: PLTR) stock is losing ground in Friday's trading. The company's share price was down 4% at 12:40 p.m. ET despite the S&P 500 and the Nasdaq Composite being up 0.7% and 0.5%, respectively, at the same point in the day's trading.

Palantir's valuation is retreating a bit today as investors take profits after an incredible bull run. Recent news that the U.S. defense budget will be slightly smaller this year than last may also be a factor.

Palantir stock hit a new record high in yesterday's trading after the company announced that it had entered into a $100 million new contract to co-develop a new artificial intelligence (AI) software system with The Nuclear Company to facilitate nuclear construction projects. Some investors are taking profits on the stock, and the selling action is pushing the company's share price lower.

Investors may also be reacting to the Department of Defense's budget request for a base budget of $848.3 billion for its 2026 fiscal year, which represents a small decrease over the previous budget after accounting for inflation. Even with today's pullback, Palantir stock is still up 83% across 2025's trading.

With today's pullback, Palantir now has a market capitalization of roughly $328 billion and is valued at approximately 239 times this year's expected earnings and 84 times expected sales. While the company's highly growth-dependent valuation potentially opens the door for big sell-offs if business performance comes in weaker than anticipated or macroeconomic conditions take a turn for the worse, the company has been posting impressive results and has a long runway for continued expansion. Palantir is a high-risk, high-reward investment, but its competitive advantages suggest that the stock could still be a winner for long-term investors.

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