Palantir CEO is cashing in. Should you be nervous?

Palantir is one of the best-performing companies this year, more than tripling in value as Wall Street pours money into AI. However, recent insider activity is raising eyebrows and concerns.

CEO Alex Karp and several other high-level executives are selling more than $200 million in Palantir shares, a move that comes at a time when investors are already becoming skeptical about the future of AI. Karp sold 585,000 shares for $96 million.

When insiders sell after a huge run, it doesn't necessarily signal bad news. But when they do it jointly, and the stock is under pressure, it's important to pay attention.

Here’s what investors are reacting to:

• Karp’s sale is worth about $96 million.
• Other execs, including the President and CTO, are also cashing in.
• Over $200 million in proposed insider sales hit the tape.
• The timing coincides with a pullback in Palantir shares.

Why analysts are cooling on Palantir stock right now

The expansion of Palantir is phenomenal. In the third quarter, sales were up by 63%. Governments and commercial businesses are using the company's AI platform, and it recently got a big security clearance to grow in Australia.

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But none of it prevented Karp and his colleagues from trimming their portfolios.

Other high-ranking officials, such as President Stephen Cohen and CTO Shyam Sankar, also filed to sell shares. The insider group put more than $207 million in shares on the block. It's not uncommon for CEOs to sell their shares when they vest or reach a certain price. However, the timing here begs a good question: do they fear the stock is getting ahead of itself?

Palantir’s business is still thriving, so why the doubts?

Let's be clear: Palantir's foundations are solid. But some experts, and even AI models, fear the stock could be too pricey.

A new AI-powered analyst model lowered Palantir's rating from Buy to Hold and cut its price target from $232 to $188. Why? Value. Palantir still trades at more than 1,500 times its profits, even after a dip.

Traditional analysts are in no rush to call it cheap either.

• An average price target around $186.
• Most firms holding steady at Neutral/Hold ratings.
• A high target of $255 (BofA) and a low of $50 (RBC).
• Freshest downgrade came from an AI model; it's not a Wall Street firm.

The real numbers behind Palantir’s valuation dilemma

The insider transactions have gotten a lot of attention, but the data underlying Palantir's stock price offers an equally interesting narrative.

Palantir is trading at:

• More than 1,500 times earnings
• Enterprise value to EBITDA is close to 400x.
• Price-to-book ratio is more than 50x

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These numbers make Palantir one of the most expensive tech companies traded on the open market. The S&P 500 has a forward P/E of around 21x, which is a good comparison. Microsoft and Nvidia, two of Palantir's largest AI competitors, trade at significantly lower multiples, despite having substantially larger revenue bases.

Even with the extra cost, the firm is still growing quickly. In its most recent earnings:

• Q3 revenue grew 63% year over year
• Full-year revenue guidance was raised to as high as $4.4 billion
• U.S. commercial revenue jumped 77%, driven by demand for its Foundry platform and new AI modules

Palantir's doing well, but the gap between its growth and its value is what is making analysts and investors nervous.

Palantir’s business is still firing on all cylinders

Even if some are worried about insider selling and valuation, Palantir's core business is still quite strong.

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In the third quarter of 2025, the company made around $1.18 billion, which was about 63% more than the same time the year before. Customers from both the government and the private sector are using its AI platform more and more, with the U.S. commercial sector expanding the fastest.

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That increase is translating into actual money and profit. In the third quarter, Palantir made a lot of money according to GAAP and had more than $500 million in operational cash flow, with free cash flow margins in the mid-40% level. The firm has made almost $2 billion in adjusted free cash flow over the last several quarters, along with multiple quarters of GAAP profit.

Management has also boosted its full-year forecast, saying it expects around $4.4 billion in sales and about $2 billion in adjusted free cash flow. Palantir also recently got IRAP PROTECTED accreditation in Australia and has been working more closely with the U.S. military sector.

Key business points for investors:

• Revenue is growing at a strong double-digit pace
• U.S. commercial sales are expanding especially quickly
• The company is consistently profitable on a GAAP basis
• Free cash flow is high relative to revenue
• New government clearances and defense deals add long-term stickiness

The engine is still running well, in short. The Palantir narrative isn't about whether the firm is securing work; it's about whether the current stock price provides the company with enough flexibility to make mistakes.

What investors should watch as Palantir insiders exit

It's not always a bad thing for insiders to sell. Karp still has millions of shares. He might simply be spreading out his investments. But investors should pay attention when a group of CEOs cashes out, and analysts start to sound apprehensive.

If you hold Palantir, consider whether you're buying a stock priced for perfection or a company that is rising quickly. And if the people on the inside are making money, what do they know that you don't?

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