Druckenmiller just sold all his Palantir shares
f you had invested $10,000 in Palantir just three years ago, that investment would be worth over $150,000 today. That's a staggering 1,500% return. That same $10,000 invested in Nvidia, the largest company in the world, would have turned into $81,000.That's a return of just over 800%, which is incredible, but still less than half of what Palantir delivered
But while the hype is reaching a fever pitch, one of the most legendary traders is quietly heading for the exit. Billionaire Stanley Druckenmiller just sold his entire stake in Palantir. And if you don't know who Druckenmiller is, you should. He's not just any billionaire—he’s a trader famous for his incredible market calls.
To give you an idea of his track record, Druckenmiller masterfully navigated the dot-com bubble of the late 1990s and early 2000s. He rode the wave up and got out right before the crash that wiped out trillions in market value. He has a history of selling into overhyped markets, and today, he sold Palantir.
So is Druckenmiller’s sale a massive red flag for the stock?
Is he signalling that Palantir is dangerously overhyped, just like the dot-com stocks of 2000? Or is this just a case of healthy profit taking after a great run?
Let’s investigate
If we're looking for a reason why a trader like Druckenmiller would sell, the most obvious answer is Palantir's astronomical valuation. The price-to-sales ratio currently sits at a dizzying 100, and it's risen dramatically over the past year and a half. To put that into perspective, Nvidia’s PS ratio is around 26, and the average for the entire tech sector is just 7.4.
It gets even more extreme when we look at the price-to-earnings, or PE, ratio, which is currently over 600. By comparison, Nvidia trades at a PE of 55, and the tech sector average is 45. These numbers have led some analysts to call Palantir the most expensive stock in the market. When a company is this expensive, it often means future growth is already priced in—leaving very little room to go up and a long way to fall.
From this angle, Druckenmiller’s decision to sell looks like a classic move to avoid a correction. So there is evidence for overvaluation relative to the rest of the tech sector. But even legendary traders make mistakes. So what if there’s a good reason for those sky-high prices?
This is where the story gets complicated
While the valuation looks overextended, Palantir’s fundamental performance has been exceptional. The company has been reporting accelerating earnings and revenue growth that consistently smashes expectations.
In Q4 of 2024, it posted a 36% year-over-year increase in revenue—and the same for Q1 of 2025. And Palantir’s growth is only projected to continue. Analysts project that by 2027, its revenue could rise to $6.5 billion, and earnings could go up to nearly $2 billion.
So where is this growth coming from?
Palantir is at its core an AI defence company. About 55% of its revenue comes from stable government contracts. This makes the company a direct beneficiary of increased defence spending. The recent push for NATO members to increase defence spending to 5% of GDP by 2035 is a massive potential tailwind for Palantir’s core business.
The other 45% of its revenue comes from commercial contracts—a segment that’s growing rapidly. This shows the company is successfully diversifying its revenue streams, making it more resilient.
Looking at these numbers, you could argue that Druckenmiller is wrong. This is a thriving business that might just justify its premium price.
But while Palantir’s business is growing impressively, its stock price has actually grown far faster. The fact that Palantir’s stock price surged 90% this year while its revenue grew 29% year-over-year reveals a big disconnect.
The enthusiasm for the stock has outpaced the fundamental growth of the company behind it. This has created a situation where Palantir is priced for perfection. To justify its current stock price, the company needs to deliver flawless execution and growth rates for years to come. Any small misstep could send the stock tumbling.
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