Palantir v Big Short

This is the Palantir chart annotated with our automated signalling system. It has been a long time since the last buy signals, and we have a Coppock sell signal. Coppock is a momentum indicator, so a sell signal does not necessarily mean the shares will drop; a loss of momentum could be a stalling of the share price or even a gentler rate of climb. However, Palantir is a momentum play, so a loss of momentum is likely to trigger selling.

One trading strategy that I have discussed before is to hold shares while the Coppock indicator is climbing and sell when it starts to fall. On this rule, Palantir would be a sell. The idea would be to repurchase the shares when Coppock starts climbing again. A strategy of holding shares while Coppock is climbing and avoiding them while it is falling can produce impressive results. Buy on the blue up arrows and sell on the magenta down arrows. The bigger light blue arrow means Coppock is turning up from negative, which is a more powerful buy signal.

What about the fundamentals? Palantir is one of the most exciting and fastest-growing software companies the world has ever seen. The jewel in the crown of its business is its US commercial operation, which grew 93pc year on year, continuing an acceleration in the growth rate that has been in force for some time.

Palantir has barely scratched the surface of its US commercial potential, and new customers typically start small and then grow their business with Palantir dramatically. I conclude from all this that it is not entirely fanciful to imagine Palantir tending towards doubling sales in 2026 and growing dramatically thereafter. There are several other companies in the AI space, like OpenAI and Anthropic, which are much more than doubling sales each year. AI is in a moment, to put it mildly.

So let’s start to look at what might be a bedrock valuation for Palantir if the shares continue to fall. I think Palantir would be fairly, even conservatively, valued at 20 times sales, given that the business is highly profitable and throws off huge amounts of cash. Presently, it is valued at 92.5 times likely 2025 sales, cue general panic.

However, the combination of a falling share price with sharply rising sales has a dramatic effect on share price valuations. It’s aggressive but not impossible that Palantir will roughly double sales annually in the next few years as the faster-growing US commercial business becomes more important. Now look at the sequence.

1925, $4bn; 1926, $8bn; 1927, $16bn; 1928, $32bn; 1929, $64bn and 1930, $128bn. Compound growth is a potent force described by Warren Buffett as the eighth wonder of the world. By 2027, the shares are already looking good value at around 20 times sales and by 1930, we could be looking at a $1,000 share price or much more if the multiple of market value to sales remains elevated.

This is the wildest of speculation, but I expect Alex Karp would not have too much quarrel with these numbers. At the moment, the bears are firmly in charge, but on the Fidelity hypothesis that the most successful investors are forgetful or dead, this might be a moment to stick Palantir shares in a metaphorical drawer and forget all about them for five years.

A refinement, now that the Coppock indicator is falling sharply, would be to buy more when Coppock next turns higher. Lastly, you could choose to be out of the shares while waiting for this to happen. Hold while Coppock is rising; avoid while it is falling.

A fast-growing business like Palantir should not be valued on sales for a year that has nearly ended or even next year’s possible sales. I think it would be reasonable to value the shares at 20 times 2027’s possible sales. This gives us a present value for the shares, discounting back at five per cent of around $120. I expect buyers will dig in around there if not before, and below $120, the shares are trading at levels from which they would bounce back strongly, even explosively.

There is also the possibility that if my $1,000 share price target is reasonable, buyers at around $120 will make a fortune. The key is that the fundamentals remain on track, and the key to that is that the US commercial customers continue to achieve amazing results from using Palantir’s software.

It is like everything in life. If Palantir can deliver, they will do very well. Alex Karp is sure they will.

And our U.S. commercial business—the emerging core of Palantir and the seed of what an entire industry will become, perhaps the world’s most dominant, in the years to come—nearly doubled in twelve months, generating $306 million in revenue last quarter, representing a 93% increase from $159 million the year before. 

Alex Karp, CEO and co-founder, Palantir, Q2, 2025, 4 August 2025

I have just realised that I have been looking at the wrong quarter. In Q3 2025, US commercial revenue grew, not by 93% but by 121%; that is why I had this idea that it was reasonable to talk about Palantir revenue tending towards doubling every year. This is an amazing company. As Karp says:

We are still at the very start of things.

Alex Karp, CEO and co-founder, Palantir, Q3, 2025, 3 November 2025