Trump Says Palantir Has "Great Warfighting Capabilities," but Michael Burry Thinks It's Overvalued by More Than Half in 2026

President Donald Trump published a post to Truth Social last Friday, stating that Palantir (NASDAQ: PLTR) is a company that delivers "great warfighting capabilities." The comments came on the heels of a big sell-off for the stock following some recent comments from "Big Short" investor Michael Burry.

Burry has taken a highly visible bearish stance on Palantir stock and has been making headlines this month with statements painting a challenging picture for the artificial intelligence (AI) software leader. In particular, the famous investor thinks that AI rival Anthropic is "eating Palantir's lunch."

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Burry is very bearish on Palantir

Last week, Burry confirmed that continues to hold bets against Palantir stock. Specifically, he said that he owns put options expiring Dec. 19 at a $100 price point. He also said that he owns $150 strike-price puts expiring June 17, 2027. The price target for the

December 2026 puts implies downside of 24%. Meanwhile, his June 2027 strike-price put target implies downside of 62%. In his comment detailing the positions, Burry said "I am not selling these today." While the statement potentially leaves the door open for Burry to sell out of his put options before expiration, his strong bearish stance has attracted a lot of attention.

Big sell-offs for Palantir stock may have been a driving factor in President Trump deciding to weigh in with positive commentary on the company last week. Palantir is leading provider of AI software and analytics services for the U.S. military, and the company has made services for the defense industry a key part of its long-term growth strategy.

Palantir's valuation sets up high-risk, high-reward play

Palantir stock is seeing positive momentum in Monday's trading. The company's share price had risen 3% in the daily session as of 3:15 p.m. ET. On the other hand, the stock is still down 26% across 2026's trading and 36% from its lifetime high.

Even with some substantial valuation pullbacks, Palantir has one of the most growth-dependent valuation profiles of any major tech stock on the market. The company is currently valued at roughly 100 times this year's expected non-GAAP (adjusted) earnings and 43.5 times expected sales.

While Palantir currently commands a leading position in the AI software space, the company's highly growth-dependent valuation means that the stock remains a speculative play despite trading down big from its lifetime high. It's likely that the company will continue to win major contracts with U.S. defense agencies and other government organizations, but there's a risk that the business's growth among public sector and private sector customers will fall short of expectations. Along those lines, there's a risk that political shifts in the U.S. could result in a softer demand outlook.

Based on the company's core service offerings and stellar sales and earnings growth, Palantir appears to be a very strong company. On the other hand, the stock's valuation profile means that the big upside potential associated with shares also comes with significant downside risk.

Keith Noonan 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.