Palantir Slides After Burry ‘Bubble’ Warning

This article first appeared on GuruFocus.

Palantir (PLTR, Financials) came under pressure after Michael Burry warned that the stock looks stretched, reviving a debate that has followed the company for months: whether its powerful growth story can keep up with its valuation.

The stock fell about 6% as investors reacted to the comment, though some buyers stepped back in after hours. That response says a lot about how the market currently sees Palantir. There is real excitement around the company’s role in artificial intelligence and defense software, but there is also growing unease about how much optimism is already built into the share price.

Palantir’s business momentum has been difficult to ignore. The company recently posted about 70% revenue growth, a pace that continues to attract bullish investors. Supporters argue that Palantir has carved out a strong position in military AI, government analytics and complex enterprise software, giving it room to keep expanding.

Still, critics say the stock is priced for near-perfect execution. With Palantir trading at a steep premium to much of the software sector, even a small slowdown could make investors nervous.

That leaves the stock in an interesting spot. The long-term story still appeals to many investors, but the market is clearly becoming less willing to ignore valuation.