RBC Waves the Red Flag

Palantir Technologies $PLTR ( ▼ 3.47% ) is heading into earnings under growing scrutiny.

RBC Capital Markets $RY ( ▼ 1.51% ) reiterated its Underperform rating and held its $50 price target, implying around 70% downside from today’s close. The firm warns that valuation risks and slowing fundamentals could drive steep downside.

The call comes after a massive rally over the past year. But recent weakness has crept in, and RBC says the risk-reward setup now looks skewed sharply against investors at current levels.

RBC analyst Rishi Jaluria said Palantir remains the most expensive stock in his software coverage, with valuation difficult to justify absent a major beat-and-raise quarter. Without that, he believes the current multiple is unsustainable.

The firm’s internal government tracker also points to softer momentum. Jaluria flagged declines in qualified contract value and net new annual contract value, suggesting fewer late-stage deals and slower revenue adds than expected.

Beyond government contracts, RBC sees growing skepticism around Palantir’s commercial customer base. Recent checks suggest some enterprise clients are reassessing or moving off the platform amid rising competition.

Jaluria also highlighted rising retail investor frustration. With a large cash balance and no clear capital return strategy, combined with privacy and ethics concerns, RBC believes sentiment could sour further and drive multiple compression.