Palantir (NASDAQ: PLTR) kicked off 2025 as one of the market’s top performers, surging over 35% year-to-date and extending its strong momentum from the past two years.
The data analytics giant, a longtime retail investor favorite, has struggled to earn consistent confidence from Wall Street, with concerns over its high valuation and heavy reliance on government contracts weighing on sentiment.
At the same time, persistent insider selling—totaling more than $40 million in January alone—has added to investor unease.
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The stock hit a record high of $124.62 on February 18 following its Q4 2024 earnings report, only to tumble 12% the next day after CEO Alex Karp adopted a stock trading plan allowing him to sell nearly 10 million shares by September.
The decline accelerated, with Palantir sliding 24% in less than 24 hours to trade at $102.85 at the press time.
Compounding the downturn, reports surfaced that the Pentagon is preparing for an 8% annual reduction in defense spending for the next five years—posing a potential risk to Palantir’s government-driven revenue.
With the stock facing mixed signals, Finbold consulted DeepSeek, also available via Finbold’s own AI price prediction tool, for additional insight into what price the stock could be trading at by the end of the year.
DeepSeek identifies key Palantir stock price drivers
When prompted, DeepSeek AI first highlighted Palantir’s AI Platform (AIP) growth as a major catalyst. The company has aggressively expanded its AI capabilities, attracting new customers and increasing spending from existing clients.
The AI model also pointed to government contracts and defense spending as another key driver.
Despite reports of an 8% annual Pentagon budget reduction, Palantir’s software remains integral to U.S. defense and intelligence agencies. DeepSeek noted that the demand for cost-efficient AI-powered solutions could offset potential revenue losses from budget constraints.
Despite these tailwinds, DeepSeek AI highlighted several risks that could pressure the stock. Palantir’s valuation remains a concern, as even after its recent pullback, the stock trades at 202 times this year’s expected earnings and 69 times expected sales.
These lofty multiples suggest that PLTR may struggle to sustain long-term gains.
Insider selling is another red flag. CEO Alex Karp’s plan to sell 10 million shares by September 2025, combined with $40 million in insider sales in January, has raised concerns about leadership confidence. Historically, large insider sales have been seen as bearish signals for stocks.
Palantir’s heavy reliance on government contracts is also a risk. The company generates 55% of its total revenue from government deals, exposing it to policy shifts, budget cuts, and geopolitical uncertainties.
While Palantir’s commercial business is growing, its dependence on federal contracts remains a structural challenge.
DeepSeek predicts Palantir stock price for December 31, 2025
Once all factors were considered, DeepSeek AI arrived at a $122 price target for Palantir stock, factoring in growth projections and valuation concerns. This forecast, which is 9.63% lower than Loop Capital’s $135 price target, suggests a bullish outlook despite some caution regarding valuation sustainability.
At the current price of $102.86, DeepSeek’s target implies an 18.61% upside, while the bull case scenario of $140 would represent a 36.07% increase if AI adoption accelerates and commercial revenue grows beyond 40%.
Conversely, the bear case scenario, which projects a decline to $80 to $90 if growth stalls and valuation contracts, would mean a potential downside of 12.49 to 22.19% from current levels.
Featured image via Shutterstock
