CEO Alex Karp Sends Palantir Stock Investors a $2 Billion Warning

Palantir Technologies (NASDAQ: PLTR) has been one of the hottest artificial intelligence (AI) trades on the market since the launch of ChatGPT popularized the technology in late 2022. The stock has advanced 1,620% during that period.

CEO Alex Karp has repeatedly lambasted short-sellers as Palantir shares have rocketed higher. When hedge fund manager Michael Burry disclosed a substantial bet against the company in the third quarter of 2025, Karp said, “I think what is going on here is market manipulation.”

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However, Karp himself has sold $2.2 billion in Palantir stock over the last three years. While he still owned 6.4 million Class A shares (currently worth about $832 million) after the latest sale in November 2025, investors should still interpret his actions as a warning.

Here are the important details.

Palantir helps clients manage and make sense of complex data. Its core analytics software products (Gotham and Foundry) integrate information into an ontology, a decision-making framework powered by machine learning (ML) models. Those models become increasingly proficient at recommending actions as the system captures more data.

That ontology-based software architecture differentiates Palantir from other data analytics solutions. But the company is truly formidable because it has developed an adjacent Artificial Intelligence Platform (AIP) that lets developers build large language models into workflows and applications, which means users can engage data and automate processes with natural language.

Last year, Forrester Research ranked Palantir as a leader in AI decisioning platforms. More recently, Morgan Stanley analyst Sanjit Singh said Palantir was emerging as the standard in enterprise AI. That portends strong sales growth for years to come. Grand View Research estimates spending on AI platforms will increase at 38% annually through 2033.

Palantir reported exceptional fourth-quarter financial results, beating estimates on the top and bottom lines. Its customer count increased 34% to 954, and the average spend per existing customer increased 139% as net revenue retention increased for the ninth straight quarter. In turn, revenue increased 70% to $1.4 billion, the tenth straight acceleration.

Meanwhile, non-GAAP (generally accepted accounting principles) operating margin expanded seven percentage points to 57%. Those values (revenue growth + operating margin) put Palantir’s Rule of 40 score at 127%, which is unprecedented for a software company. And non-GAAP net income soared 79% to $0.25 per diluted share.

Looking ahead, management guided for 60% revenue growth for full year 2026, which would represent an acceleration from 56% revenue growth in the full year 2025.

Palantir stock is down 37% from its high, partly because investors are worried about how AI code generation tools will impact the software industry. Even so, shares trade at 74 times sales, which makes it the most expensive stock in the S&P 500 (SNPINDEX: ^GSPC) several times over. AppLovin is second at 30 times sales. That means Palantir could lose more than half of its value and still be the most expensive stock in the index.

I cannot speak to why Alex Karp sold $2.2 billion in Palantir stock over the last three years. Insiders might sell shares for any number of reasons, and many of them are benign. But I think investors with large positions in Palantir should follow Karp’s lead. The stock is very expensive, and the risk-reward profile is undoubtedly skewed toward risk despite Palantir’s solid financial results. Now is a good time to take some profits.

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Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

CEO Alex Karp Sends Palantir Stock Investors a $2 Billion Warning was originally published by The Motley Fool