Palantir Technologies (PLTR) is one of the biggest artificial intelligence winners this year. The kind of momentum we’ve see this year is enough to turn anyone into a staunch believer.
That is, until Michael Burry walked into the room like a typical old-school gunslinger and started flipping tables.
Michael Burry’s piece, “Palantir’s New Clothes: Foundry, AIP & the Failure of Reason,” on his substack is transforming the PLTR thesis and forcing Wall Street to pay attention. He goes into great detail about why he feels a certain way about the data analytics company.
The broader theme reflects how Palantir’s valuation is drifting far beyond what the underlying business fundamentals can justify. And Burry prefaces his opinions by saying, “So, what I am about to go on and on about is not meant to be personal.”
This matters, because it means his critique isn’t framed as a cheap shot at Palantir’s leadership style. Unfortunately, this is what often happens when Palantir is criticized.
Burry’s take serves as a caution to investors, who could be using the firm’s AI story as a way to avoid valuing Palantir.
A notorious market skeptic says Palantir’s story won’t hold up.Photo by FABRICE COFFRINI on Getty Images ·Photo by FABRICE COFFRINI on Getty Images
Burry’s headline number is what traders are interested in: $46 a share.
He threw out the number as a rough “worth” estimate for Palantir. The figure is based on an analysis of the company’s fundamentals, which are dramatically below where they were after its monster run in 2024 and 2025.
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However, it is important to note that he did not provide just one number. Instead, Burry laid out a range of scenarios, from $21 to $146. He made it clear that he wasn’t presenting conventional Wall Street price targets.
Burry also said that he isn’t currently shorting Palantir outright. But he does have put options connected to the stock. It is a subtle distinction, but still a bearish posture.
Burry is a genius when it comes to numbers. But this is not a sterile spreadsheet takedown. Instead, Burry focused considerable time on understanding Palantir’s culture and leadership aura.
What it means is that the stock is not trading on fundamentals; instead, it is focusing on the leadership aura. However, he believes that under pressure, the valuation will fold.
He cited Michael Steinberger’s book The Philosopher in the Valley and highlighted a line attributed to CEO Alex Karp that captures the company’s internal tension.
Burry frames it plainly. The valuation is not restricted to vibes. Instead, it’s about what the market is willing to pay for them.
The core argument for Burry is that Palantir is being valued as a clean, high-margin SaaS.
However, in his opinion, that does not reflect Palantir’s underlying fundamentals. In his opinion, there is a messier business underneath, with costs and incentives that can flatter the optics.
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Here are the pressure points he is lying on.
A brutal financial history: In its early years, Palantir was a deeply unprofitable data analytics company, and it has only recently become profitable, primarily due to government-backed contracts.
Big spending: Burry also highlights a number of aggressive buying choices made by Palantir, many of which did not pan out.
Stock-based compensation: Burry says incentives are important and that SBC may change how “cheap” or “profitable” a firm seems.
Margin presentation and accounting optics: Burry notes that cost allocation decisions, particularly when it comes to labor connected to deployments, may make margins appear more like “software” than they actually are.
And at the same time he dropped a line designed to travel.
It is no accident that Palantir became a market obsession. The company’s AI platform pitch is powerful enough to drive a historic rally.
However, when a stock is priced for greatness, the next phase is brutal.
If Palantir growth returns to normal, the multiple will become restricted.
If the margins move, the story will also change.
The hype surrounding AI heavily influences the debate. If that hype dies down, “premium” stocks like Palantir are the first to face the chopping block.
In essence, if you boil it down, what Burry wants is for investors to manage expectations risk.
There is no reason Palantir can’t command the valuations at which it currently trades, but he says the market could be paying for a version of the firm that doesn’t exist. Still, ultimately, quarterly figures will bring the conversation back to reality.
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