Palantir’s stock plunged 6% on Tuesday, and it came even after the company posted strong earnings, raised its full-year guidance, and crossed $1 billion in revenue for the second quarter in a row. But Wall Street didn’t care very much, and not for very long either. What actually set the fire was Mr. Michael Burry (yes, the same guy from “The Big Short”) who just revealed he’s betting against Palantir. That sent shockwaves through the AI crowd and added fuel to fears that this stock might be flying too close to the sun. CEO Alex Karp didn’t sit quietly. He went on CNBC and absolutely lost it, saying short sellers are engaged in “market manipulation.” He said the trades were “super triggering” and accused them of “shorting one of the great businesses of the world.” He told CNBC, “We delivered the best results everyone, anyone’s ever seen.” But the market clearly disagreed. Because right after his comments, shares continued to slide anyway. Wall Street questions Palantir’s sky-high valuation The stock fall overshadowed Palantir’s numbers. They beat both revenue and earnings expectations, lifted guidance, and still got punished. Why? Expectations were already sky-high. Goldman Sachs’ Gabriela Borges reminded clients that the company had already crushed revenue last quarter by 7%, and the stock had soared 175% year-to-date. So basically, beating the numbers wasn’t enough anymore. Investors wanted fireworks, and they got… an angry CEO and a short position from Burry. The main issue is the valuation. Palantir trades at a forward price-to-earnings (P/E) ratio of 254. To compare, Nvidia, which is the most valuable chipmaker on Earth, trades at just 35. Even Oracle has a forward P/E of 35, and AMD sits at 149. So yeah, Wall Street thinks Palantir’s premium is insane. And unless the company keeps raising the bar, that multiple starts looking more and more ridiculous. Brent Thill at Jefferies said they still like Palantir but think better AI software bets exist, pointing to Microsoft and Snowflake as stronger picks. Mizuho said the risk-reward was becoming a “big challenge.” Over at D.A. Davidson, Gil Luria kept a neutral rating, saying Palantir is “raising the bar even higher.” Analysts at RBC didn’t sound impressed either, warning that while Palantir’s AIP platform is still being rolled out, growth is mostly limited to U.S. enterprise customers and early AI spending cycles. Market selloff hits Palantir and other AI names Palantir wasn’t the only one bleeding. The broader market also slumped Tuesday. The S&P 500 fell 0.9%, the Nasdaq lost 1.5%, and the Dow dropped 193 points. AI stocks led the drop. Oracle slid 2%, AMD dropped over 1%, and even giants like Amazon and Nvidia pulled back. The AI trade that’s been lifting the whole market just hit a wall. The S&P’s forward P/E ratio is now over 23, close to levels last seen in 2000, right before the dot-com crash. Anthony Saglimbene from Ameriprise told CNBC, “We haven’t really seen any major corrections or any real pressure on stocks since April.” He said the market needs a breather. With all the capital expenditures being pumped into AI, he questioned if the earnings growth can really keep up. Top Wall Street execs added to the panic. Goldman Sachs CEO David Solomon warned that a 10% to 20% drop in stocks is likely over the next 12 to 24 months. Morgan Stanley’s CEO Ted Pick said 10% to 15% drawdowns should be expected and aren’t even caused by big macro problems, they just happen. Even before Tuesday, markets were shaky. On Monday, the S&P 500 and Nasdaq rose, but the Dow dropped over 200 points. And though the S&P is still close to record highs, it even closed above 6,800 last month, traders are clearly nervous now. Don’t just read crypto news. Understand it. Subscribe to our newsletter. It's free.Palantir’s stock plunged 6% on Tuesday, and it came even after the company posted strong earnings, raised its full-year guidance, and crossed $1 billion in revenue for the second quarter in a row. But Wall Street didn’t care very much, and not for very long either. What actually set the fire was Mr. Michael Burry (yes, the same guy from “The Big Short”) who just revealed he’s betting against Palantir. That sent shockwaves through the AI crowd and added fuel to fears that this stock might be flying too close to the sun. CEO Alex Karp didn’t sit quietly. He went on CNBC and absolutely lost it, saying short sellers are engaged in “market manipulation.” He said the trades were “super triggering” and accused them of “shorting one of the great businesses of the world.” He told CNBC, “We delivered the best results everyone, anyone’s ever seen.” But the market clearly disagreed. Because right after his comments, shares continued to slide anyway. Wall Street questions Palantir’s sky-high valuation The stock fall overshadowed Palantir’s numbers. They beat both revenue and earnings expectations, lifted guidance, and still got punished. Why? Expectations were already sky-high. Goldman Sachs’ Gabriela Borges reminded clients that the company had already crushed revenue last quarter by 7%, and the stock had soared 175% year-to-date. So basically, beating the numbers wasn’t enough anymore. Investors wanted fireworks, and they got… an angry CEO and a short position from Burry. The main issue is the valuation. Palantir trades at a forward price-to-earnings (P/E) ratio of 254. To compare, Nvidia, which is the most valuable chipmaker on Earth, trades at just 35. Even Oracle has a forward P/E of 35, and AMD sits at 149. So yeah, Wall Street thinks Palantir’s premium is insane. And unless the company keeps raising the bar, that multiple starts looking more and more ridiculous. Brent Thill at Jefferies said they still like Palantir but think better AI software bets exist, pointing to Microsoft and Snowflake as stronger picks. Mizuho said the risk-reward was becoming a “big challenge.” Over at D.A. Davidson, Gil Luria kept a neutral rating, saying Palantir is “raising the bar even higher.” Analysts at RBC didn’t sound impressed either, warning that while Palantir’s AIP platform is still being rolled out, growth is mostly limited to U.S. enterprise customers and early AI spending cycles. Market selloff hits Palantir and other AI names Palantir wasn’t the only one bleeding. The broader market also slumped Tuesday. The S&P 500 fell 0.9%, the Nasdaq lost 1.5%, and the Dow dropped 193 points. AI stocks led the drop. Oracle slid 2%, AMD dropped over 1%, and even giants like Amazon and Nvidia pulled back. The AI trade that’s been lifting the whole market just hit a wall. The S&P’s forward P/E ratio is now over 23, close to levels last seen in 2000, right before the dot-com crash. Anthony Saglimbene from Ameriprise told CNBC, “We haven’t really seen any major corrections or any real pressure on stocks since April.” He said the market needs a breather. With all the capital expenditures being pumped into AI, he questioned if the earnings growth can really keep up. Top Wall Street execs added to the panic. Goldman Sachs CEO David Solomon warned that a 10% to 20% drop in stocks is likely over the next 12 to 24 months. Morgan Stanley’s CEO Ted Pick said 10% to 15% drawdowns should be expected and aren’t even caused by big macro problems, they just happen. Even before Tuesday, markets were shaky. On Monday, the S&P 500 and Nasdaq rose, but the Dow dropped over 200 points. And though the S&P is still close to record highs, it even closed above 6,800 last month, traders are clearly nervous now. Don’t just read crypto news. Understand it. 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