Palantir Technologies has created one of the most dramatic stories on Wall Street this year, defying conventional investment narratives. In 2025, it became the top-performing stock in the S&P 500, surging over 106% and at points climbing 144% from the start of the year—outpacing even AI heavyweights like Nvidia. This explosive growth was fueled by its robust financial performance, notching its first billion-dollar quarter and momentum from government and commercial AI contracts.
However, Palantir’s meteoric rise has been followed by a brutal reversal. Over the last six trading sessions, Palantir shares plunged more than 17%, wiping out $73 billion in market capitalization and marking the largest drop since April. This tumble handed short sellers $1.6 billion in profits, Bloomberg reported, citing data from S3 Partners. (That figure is still dwarfed by the $4.5 billion paper losses that shorts racked up earlier in the year, S3 says.) In recent days, Palantir has also been the worst performer in the S&P 500, illustrating an extreme swing from hero to villain in the market.
The vicious short-seller report
Palantir’s dramatic stock moves followed fresh fire from short sellers, particularly Citron Research, led by Andrew Left. In a scathing report, Citron argued that Palantir’s stock was detached from its business fundamentals and sound analysis. It included a caricature of Palantir CEO Alex Karp in the royal court of OpenAI, titled “Your highness’s multiple,” laying out the case for Palantir having much farther to fall.
Citron’s thesis is that OpenAI, widely recognized as the leader in AI, is about to receive a $500 billion valuation with projected revenue of $29.6 billion in 2026, resulting in a price-to-sales ratio of nearly 17. By contrast, Palantir is forecasted to deliver $5.6 billion revenue in 2026. Applying OpenAI’s valuation multiple to Palantir would yield a stock price of just $40. (Citron showed their math, calculating that $5.6 billion multiplied by 17 would shoot up to a roughly $95 billion market cap, divided by 2.37 billion shares outstanding, yielding a $40-per-share valuation.) “It should be noted,” Citron writes, “that even at a 17x sales multiple, OpenAI has the highest multiple of any scaled SaaS stock in the world, and that number in itself is extreme. This means that at $40, PLTR would still be expensive.”
Short sellers like Left insist that Palantir’s business isn’t as scalable or as subscription-based as Wall Street prefers, in stark contrast to OpenAI. Palantir’s dependence on government deals introduces uncertainty and volatility, leading Citron to claim that the stock is unjustifiably expensive even after recent losses.
“OpenAI is creating a flywheel that Palantir lacks,” the report says, adding that the widening moat and cycle of growth, data, and scale is “reminiscent of Google in its prime.” Palantir, on the other hand, is more like a defense contractor, with real “stickiness,” but growth hinging on slow, customized contracts that don’t compound. “OpenAI is a self-reinforcing growth engine, while Palantir is essentially locked-in consulting wrapped in software.” Citron contrasted a chart of Palantir’s impressive, steady revenue growth with OpenAI’s skyrocketing results.
Best of times, worst of times
Palantir’s story in 2025 is a case study in market euphoria versus valuation reality. Fueled by speculative optimism about AI, its share price rapidly baked in years of expected growth. But as profit-taking sets in, momentum evaporates, and critical reports highlight the mismatch between price and fundamental value, fortunes can reverse just as quickly.
Even now, contrarian trading remains high—if Palantir rebounds, short interest is expected to return as investors closely watch future earnings, contract renewals, and the sustainability of its growth strategy. This extraordinary volatility means that Palantir, in 2025, is the top-performing and worst-performing stock—at the same time.
Palantir’s swings also come against the backdrop of a wider “tech sell-off” in markets following reports that the AI revolution isn’t materializing as planned. A sweeping MIT report found that despite tens of billions of investment, 95% of generative AI pilots at companies are failing.
OpenAI CEO Sam Altman himself rattled markets by using the B-word: bubble. Citron remarked with interest: “This morning, we read that Sam Altman stated the AI market is in a bubble. Altman isn’t shorting Palantir—he’s simply telling the truth. The market is frothy, and no one knows it better than the man who built the most valuable AI company in the world.”
Palantir did not immediately respond to a request for comment.
For this story, Fortune used generative AI to help with an initial draft. An editor verified the accuracy of the information before publishing.