Palantir's Partnership Spree Fails to Offset Extreme Valuation Concerns

What happened

Palantir Technologies announced 26 partnerships across 15 sectors in 2025, signaling an aggressive expansion beyond its traditional defense focus. This news emerges as the DeepValue report highlights severe valuation risks, with a P/E of 354 and the stock trading over 500% above its intrinsic DCF value. The report maintains a SELL rating due to this overvaluation, despite strong fundamentals like GAAP profitability and a debt-free balance sheet with $6.4 billion in cash. While the partnerships could improve growth visibility and competitive positioning, they do not immediately address the core risks of government contract timing and intensifying competition from hyperscalers. Overall, the operational progress is overshadowed by the lack of margin of safety, keeping the investment asymmetry skewed to the downside.

Implication

The surge in partnerships may broaden Palantir's market reach and diversify revenue streams, potentially supporting future RPO growth and competitive moat. However, these deals have not yet translated into higher recognized revenue or improved margin durability, which are critical for validating the current premium. Investors must closely monitor RPO conversion rates and contract liabilities in upcoming filings to gauge if these partnerships yield measurable financial benefits. Persistent risks from hyperscaler competition and government budget uncertainties could erode any gains, maintaining pressure on the stock. Ultimately, without evidence of accelerated revenue recognition or sustainable competitive wins, the SELL thesis remains intact, and investors should avoid adding exposure at these levels.

Thesis delta

The partnership news slightly bolsters the growth narrative but does not materially shift the SELL thesis, as the extreme valuation and key risks persist. Investors should watch for RPO acceleration and margin stability in future reports to reconsider the stance, but no immediate upgrade is warranted.