A Brutal Month for an AI Market Favorite

Palantir Technologies just closed its harshest month in more than two years, falling 16% in November amid a broad retreat from high-priced AI stocks. The correction comes despite the company’s strong third-quarter results and a series of new commercial deals, reinforcing a growing disconnect between operational momentum and investor sentiment. As the broader AI complex entered a valuation reset, Palantir became one of the most visible casualties of the shift.

Investors who had chased AI-linked names through much of 2024 and early 2025 pulled back sharply in November, driven by concerns that market enthusiasm had outrun fundamentals. Palantir, long viewed as a premium-priced AI play, found itself at the center of this recalibration.

Earnings Strength Overshadowed by Valuation Anxiety

The month began with Palantir beating earnings and revenue expectations, posting a second consecutive quarter above $1 billion in revenue. Yet the confidence evaporated quickly. Analysts from Jefferies called the company’s valuation “extreme,” while RBC warned that Palantir’s growth was becoming increasingly concentrated in a narrow set of contracts. Deutsche Bank noted that the stock’s multiple had become “very difficult to justify,” even in an AI-driven market.

The numbers reinforced the critique. Even after its steep decline, Palantir ended November trading around 233 times forward earnings, compared with 38x for Nvidia and 30x for Alphabet. That gap has become harder for institutional buyers to overlook, particularly as macro uncertainty and rising rates push investors toward more defensible earnings profiles.

The Burry Clash Intensifies Market Drama

The selloff was amplified by news that Michael Burry — famed for calling the 2008 mortgage crash — had taken a short position against Palantir and Nvidia. Burry accused the tech giants of benefiting from artificially inflated earnings driven by hyperscaler spending.

CEO Alex Karp responded with unusual ferocity, appearing twice on CNBC in a single week. He accused Burry of “egregious market manipulation” and insisted that shorting AI infrastructure was “bats— crazy.”
While Karp’s public defense energized loyal retail investors, it did little to calm institutions seeking clearer valuation discipline.

Deal Wins Offer Momentum, but Not Enough to Offset Pressure

Palantir announced multiple commercial contracts in November, including a multiyear partnership with PwC to accelerate AI adoption in the U.K. and a deal with aircraft-engine maintenance firm FTAI. These wins strengthen Palantir’s positioning in enterprise AI, but they were not enough to counter the broader rotation out of high-multiple tech names.

The AI sector’s downturn was widespread. Nvidia fell more than 12% in November, Microsoft and Amazon lost around 5% each, and quantum computing names shed more than a third of their market value. Only Apple and Alphabet closed the month higher.

What Comes Next for Palantir and AI Stocks

For Palantir, the path forward hinges on its ability to translate rapid revenue expansion into sustained margin growth, while convincing markets that its valuation can normalize without sacrificing long-term upside. The recent pullback may ultimately reset expectations to more sustainable levels, but the volatility underscores a deeper question: how much AI enthusiasm has been priced into future growth?

Investors will watch whether Palantir’s upcoming quarters confirm a more predictable commercial trajectory — or reinforce skepticism that current prices still embed too much optimism.