Prediction: Palantir Will Do the Unthinkable and Fall Below $100 Before 2026 Comes to a Close

Although several prominent trends have come and gone since the advent of the internet in the mid-1990s, nothing has excited Wall Street and investors quite like the evolution of artificial intelligence (AI). PwC analysts foresee this technology creating more than $15 trillion in global economic value by 2030.

While much of the attention has been placed on data center infrastructure, an argument can be made that AI applications titan Palantir Technologies (NASDAQ: PLTR) has stolen the show. Since the start of 2023, shares of Palantir have skyrocketed by more than 2,200%!

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Palantir's sustainable moat steals the show

Palantir's overwhelming success is driven by its sustainable moat. No company has come close to offering its range of services at scale, meaning revenue generated from its two core operating platforms -- Gotham and Foundry -- is highly predictable.

Gotham is Palantir's star operating segment. This AI-backed software-as-a-service (SaaS) platform assists the U.S. military and its allies in planning and overseeing military missions, as well as collecting and analyzing data. Gotham's usefulness has been on full display throughout the Iran war.

But even though Palantir's business is well-positioned to thrive over the long run, near-term expectations for its stock are dicey, at best. There are no fewer than four headwinds that can drag its stock below $100/share before 2026 comes to a close.

Palantir stock can plunge below $100 before the end of 2026

History is one of the most prominent headwinds Palantir has to contend with. History shows that every game-changing technology since (and including) the advent of the internet has undergone an early innings bubble-bursting event.

The reason bubbles form has to do with investors overestimating how quickly a new technology will be adopted and/or optimized by businesses. Although AI adoption has been brisk, we look to be several years away from businesses optimizing this technology to boost sales and profits. If history repeats and an AI bubble forms and bursts, Palantir stock is likely to be hit hard.

Sticking with the theme of historical precedent, Palantir's valuation is unsightly. More than three decades of history show that price-to-sales (P/S) ratios above 30 for companies on the leading edge of a next-big-thing investment aren't sustainable. Palantir entered 2026 at a trailing 12-month P/S ratio of more than 100 and still sports a P/S ratio of 86, as of the closing bell on April 2. There's simply no sales guide Palantir can offer that justifies this premium.

S&P 500 Shiller PE Ratio hits 2nd highest level in history 🚨 The highest was the Dot Com Bubble 🤯 pic.twitter.com/Lx634H7xKa

-- Barchart (@Barchart) December 28, 2025

Thirdly, the overall stock market entered the year at its second-priciest valuation in history, based on the S&P 500's Shiller Price-to-Earnings (P/E) Ratio. The two other times that the Shiller P/E exceeded 40 during a continuous bull market were eventually followed by peak-to-trough declines of 49% (the dot-com bubble) and 25% (the 2022 bear market) in the benchmark S&P 500. If the stock market rolls over, companies priced at a premium are likely to have targets on their proverbial backs.

Fourth and finally, Palantir's Foundry segment, which is a subscription-based, AI-driven SaaS platform that helps businesses understand their data, may struggle to scale. Longtime Palantir bear and RBC Capital analyst Rishi Jaluria cautions that the customization required of Foundry for each client could make scaling this segment incredibly difficult.

Based on these factors, the party may be nearing an end (at least over the next couple of quarters) for Palantir.

Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.