We’re nearing the end of 2025, so it’s now time for pundits and market commentators to make their predictions for what 2026 will bring. I’ve been keeping a close eye on what many of the most prominent minds in the world of finance are suggesting for 2026. What I’ve found so far is a very wide divergence of opinions for the ultimate returns the market will provide investors next year.
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Palantir surged 145% year-to-date but trades at 125x forward sales and 192x forward earnings.
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The company must grow revenue 35% annually for 25 years to justify its current valuation.
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Base case projects 25% downside in 2026. Most bearish scenario cuts the stock in half.
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That’s because many who have stayed bullish and continued to predict price appreciation for many high-growth stocks tied to structural growth trends have simply been right in recent years. In fact, the growth we’ve seen not only in top- and bottom-line earnings from many AI companies has been impressive, and there are clear fundamental drivers we need to pay attention to.
On the other hand, recent weakness among top AI-related growth stocks has been notable, with Palantir (NASDAQ:PLTR) seeing recent bouts of weakness, dropping nearly 30% over a three-week period in November as concerns around AI spending ramped up and investors took profits off the table.
Since then, Palantir’s share price has rallied notably, and this stock looks poised to make another all-time high. So, with this backdrop, it may be dangerous to go against the grain. But I’m among those bears on the stock who think Palantir could have considerable downside in 2026. Here’s my prediction.
Surging more than 145% on a year-to-date basis at the time of writing, Palantir looks about as robust a growth stock as they come. That’s inclusive of this big data and AI insights company’s recent decline, which again, has been minimized by its recent risk-on rally.
Investors who have stayed invested in companies providing real-world use cases for AI have outperformed those who have stayed on the sidelines. I’m fully willing to admit I’ll be wrong with my forthcoming prediction for Palantir, but that’s what makes markets. We need buyers and sellers for true price discovery.
I think 2026 will be the year when value investors get their due. Valuations for companies like Palantir have moved beyond the realm of reason, at least in my view. The company’s AIP and Gotham platforms have performed well, and AI has certainly been a tailwind. But the amount that companies and governments ultimately spend on AI solutions for their businesses in 2026 and beyond is a real unknown, and investors are pricing in some very bullish growth rates into their models for PLTR stock and others.
