Despite Palantir Technologies Inc. (NASDAQ:PLTR) rebounding nearly 23% to about $130 following a sharp 40% drawdown from its 2025 peak, financial research firm Rebound Capital is warning investors to avoid the stock.
The firm explicitly stated, “we still won’t buy it”, cautioning that the recent market dip masks a structural trap driven by unsustainable “nosebleed valuations” and new competition from Big Tech.
Inside the Valuation Trap
Palantir’s heavy correction from its November 2025 peak of ~$207 down to a late-June low of $106 has caught the attention of growth investors looking for a discount.
However, Rebound Capital argues that at the current price of ~$130, the stock remains incredibly expensive, trading at an estimated 80x next-twelve-month forward earnings.
Furthermore, the firm highlights that Palantir structurally behaves more like a high-touch consulting firm than a traditional software business, yet it commands a premium software multiple.
Rebound Capital notes that a significant portion of forward-deployed engineering costs is classified under R&D and sales expenses rather than cost of revenue. Reclassifying these service costs would cause their high gross margins to fall materially.
Big Tech Mimics the Moat
Palantir’s primary competitive advantage—its “forward deployed engineering” model—is facing unprecedented replication at scale.
In mid-2026, tech giants aggressively copied the playbook: Amazon.com Inc.‘s (NASDAQ:AMZN) Amazon Web Services committed $1 billion to embedding engineers inside customer companies, while Microsoft Corp. (NASDAQ:MSFT) committed $2.5 billion and 6,000 engineers to identical deployment ventures.
Additionally, foundation model labs like OpenAI and Anthropic are cutting out the middleman by running their own deployment arms.
Geopolitical Sovereignty Ceilings
Compounding the domestic valuation pressures are significant international headwinds. Palantir’s international commercial revenue grew a mere 2% in the fiscal year 2025 due to severe data sovereignty concerns in Europe under the US CLOUD Act.
In June 2026, France announced it would migrate from Palantir to domestic firm ChapsVision to eliminate “strategic dependencies,” adding to a growing list of rejections from Swiss and German authorities.
How Has Palantir Performed In 2026?
Palantir shares were down 27.40% year-to-date, down 2.29% over the last month, and higher by 9.84% over the year. It closed 2.41% lower at $129.04 per share on Thursday and was also up 0.74% in the premarket on Friday.
Benzinga’s Edge Stock Rankings indicate that PLTR maintains a weak price trend in the short, medium, and long terms, with a good growth score.
Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
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