Why Palantir Stock Is Plummeting Today

Shares of Palantir Technologies (NASDAQ: PLTR) are plummeting on Monday. The company's stock lost 11.1% as of 2:20 p.m. ET and was down as much as 12% earlier in the day. The drop comes amid broader market weakness, with the S&P 500 down 2.8% and the Nasdaq Composite down 4.2%.

The artificial intelligence (AI) and big data company is being hit by growing recession fears and comments by President Donald Trump.

Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Learn More »

Recession worries intensify

Concerns about an economic downturn escalated following comments Trump made during an appearance on Fox News' Sunday Morning Futures. When asked about the possibility of a recession, Trump responded, "I hate to predict things like that," adding: "There is a period of transition, because what we're doing is very big. We're bringing wealth back to America."

The remarks did little to ease a fear that has permeated the market. Continued uncertainty in the face of trade tensions with America's largest trade partners, a shifting geopolitical landscape, as well as a possible government shutdown are putting pressure on stocks.

Valuation questions persist

Palantir's stock is especially volatile because it carries a hefty premium. Investors are willing to pay that premium based on the promise of outsize future returns, so when uncertainty arises, its stock is especially vulnerable.

To put it lightly, the premium is not a small one. Even after its stock price has fallen 40%, its current price-to-earnings ratio (P/E) is nearly 450 -- an astronomical figure. I would avoid Palantir for now; its stock is just too expensive.

Should you invest $1,000 in Palantir Technologies right now?

Before you buy stock in Palantir Technologies, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $690,624!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 10, 2025

Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.