Palantir is among the 15 worst performing stocks in the S&P 500 this year. What to expect from the company's report?

For the first time in two years, shares of the developer of civilian and military AI systems Palantir Technologies did not rise in the week preceding the quarterly report - a signal that investors see fewer reasons to buy one of the most expensive securities in the S & P 500 index, writes Bloomberg. Over the past five trading sessions, quotes of Palantir lost almost 12% of their value, although they rose slightly on Monday, February 2. The company's 2026 securities are among the 15 worst performers in the S&P 500 index. Nevertheless, ahead of the release of quarterly results, analyst William Blair advised building up a stake in Palantir, Barron's reports.

Since the beginning of 2026, Palantir has lost more than 16% of its market capitalization, becoming one of the 15 worst performing stocks in the S&P 500 broad market index. Over the past five trading sessions, the company's quotes have fallen 12%, although usually grow before reporting, notes Bloomberg. On Monday, the papers added 2%, but an hour before the close of the session traded in the plus only 0.6%. After the close of trading, the company will publish reports for the fourth quarter.

Since November 2024, the last time Palantir reported quarterly results, the stock is down about 29%.

Despite the drop, they still trade with a P/E ratio, which reflects the ratio of stock price to projected earnings, of about 142 - the third highest in the S&P 500, Bloomberg notes. By comparison, Tesla's is 209. In both cases, the stock is supported by a broad base of retail investors who don't just believe in these companies, but associate themselves with them, which helps keep valuations high, the agency emphasizes.

William Blair analyst Louis DiPalma upgraded shares of Palantir from Neutral to Outperform on Monday, which equates to a Buy recommendation. He noted that the recent drawdown has created a good buying opportunity. According to DiPalma, Palantir's securities have not escaped the pressure that software development companies have been under lately. He predicts the market's reaction to the report "will certainly be volatile," but expects positive momentum.

"While Palantir's valuation still remains inflated, it looks more defensible compared to recent venture funding rounds for AI companies," Barron's quoted DiPalma's note as saying.

Overall, analysts expect another quarter of strong growth for Palantir. Wall Street's average estimate for fourth-quarter 2025 adjusted earnings per share is expected to rise 63% year-over-year to 23 cents. Revenue is expected to rise 61% to $1.3 billion, in which case it would be the first quarter to exceed $1 billion. Palantir's contracts with the government now give the company more than half of its revenue, and analysts estimate that segment has grown more than 50% year-over-year, Bloomberg writes. Investors are particularly watching the expansion of the commercial business in the U.S.: revenue in this segment is expected to exceed $650 million in the fourth quarter - 70% more than a year ago.

The decline in capitalization from its October peak may also be a positive signal, said Quy Nguyen, investment director at Research Affiliates. "It's an encouraging sign that the company is catching up with investor expectations rather than inflating them to irrational levels," Nguyen said in comments to Bloomberg.

"There's no reason to think Palantir won't show another great quarter," DA Davidson's Gil Luria told the agency. - Nothing in this quarter points to deterioration. But it's worth noting that the company itself has set the bar too high - recent quarters have been very strong and expectations are now hard to beat."

"Investors are waiting for concrete results and adequate valuation - in general, attractive investment ideas," Morningstar Investment Service chief investment officer Mark Giarelli told Bloomberg. His recommendation on the stock is "sell" and his target price is $135, which is 8% cheaper than the opening price on Jan. 30.

On January 28, RBC also advised to sell Palantir shares and reiterated its forecast of their more than threefold drop. The investment bank pointed to a decline in the number of the AI developer's contracts, as well as their value.

Most of the 30 analysts tracking Palantir stock have a neutral stance: the securities have 18 Hold ratings, according to MarketWatch. Nine analysts advise buying the stock, while three advise selling.

The Palantir report comes amid growing skepticism about Big Tech, Bloomberg explains: investors want to see returns on large-scale investments in AI infrastructure. This mood is weighing on the sector: market participants are shifting their attention from the first beneficiaries of the AI trend to companies that can capitalize on large-scale investments from Amazon, Alphabet and Microsoft. At the same time, shares of players who risk losing from the spread of AI, including software developers, are also getting cheaper, the agency writes.

Many investors may refrain from buying Palantir amid the declining interest in shares of software developers, Bloomberg notes. Thus, Microsoft and ServiceNow securities fell sharply after the latest quarterly reports, pulling the market down on Thursday, the agency recalls.

"To avoid a reaction like ServiceNow and Microsoft, the report needs to be above expectations and the forecast needs to be no worse than consensus," said Equity Armor Investments fund manager Joe Tigay. If the forecast turns out to be cautious, the market will not support the rise in quotations, he added.

This article was AI-translated and verified by a human editor