Adding a new dimension to its outlook, Commerce Secretary Howard Lutnick confirmed this week that the Trump administration is considering taking ownership stakes in major defense contractors, explicitly naming Palantir as a possibility. This follows the government’s recent $8.9 billion investment for a 9.9% stake in Intel, signaling a strategy to bolster key U.S. technology and defense assets.

Despite this potential government backing and a strong second-quarter earnings report in early August, pressure on the stock has mounted. Concerns are fueled by insider selling, including a recent $62.7 million sale by CEO Alex Karp as part of what the company calls automatic transactions to cover tax obligations.

Short-seller Citron Research has amplified bearish sentiment, initiating a short position and labeling the company “beyond overvalued” with a $40 fair value target. Analysts echo these concerns, pointing to a forward revenue multiple they describe as “too rich,” even as bulls like Wedbush’s Dan Ives call Palantir a “poster child of the AI revolution.”

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