A great company
and a steep price
are two different
things.
✦ The bottom line
Palantir's two biggest risks aren't about whether the business works — it clearly does. They're concentration (a big slice of revenue rests on government contracts that can be cut or delayed) and expectations (the stock trades at a valuation that assumes years of flawless growth). Either could disappoint even as the company keeps performing.
↓ the brief below
Government revenue · share of total
54
%
Government customers were $2.40B of $4.48B in revenue — about 54% — down from ~55% as commercial surges, but still the majority. Budget fights, procurement delays, or a lost contract hit hard.
Source · 10-K · MD&A — Revenue by Customer Type · FY2025 · Filed Feb 17, 2026
From the 10-K · the dependence on government, in Palantir's own words
A significant portion of our business depends on sales to the public sector, and our failure to receive and maintain government contracts or changes in the contracting or fiscal policies of the public sector has adversely affected and could continue to adversely affect our business, results of operations, financial condition, and growth prospects.
↳ Palantir flags its government concentration as a risk itself. Government work is sticky and prestigious — but it's also exposed to politics, budget cycles, and procurement rules a normal customer doesn't have. Concentration cuts both ways.
Even a wonderful business can be a poor investment if you overpay. Palantir's stock has been one of the market's most expensive relative to its earnings — meaning the price already bakes in years of rapid, profitable growth.
The danger isn't that Palantir stumbles. It's that it does well — but not well enough to justify the price. When expectations are sky-high, even great results can disappoint.
Wall Street calls this
Valuation risk
First-time investors often confuse 'great company' with 'great buy.' They're different questions. A high valuation means a lot of good news is *already in the price* — leaving little margin for error.
✦ Teach me
The third risk: paying staff in stock
Palantir pays its employees heavily in stock rather than cash. That kept the company unprofitable for years, and even now it's a large expense the company flags in its filings as significant and ongoing.
The catch for shareholders is dilution: every new share handed to an employee makes each existing share a slightly smaller slice of the company. The business can grow while your ownership quietly shrinks.
Wall Street calls this
Stock-based compensation & dilution
Stock-based pay is easy to overlook because it isn't a cash cost — but it transfers value from shareholders to employees. As Palantir scales, watch whether this expense shrinks as a share of revenue, or keeps eating into the gains.
⚠
Watch
A genuinely strong, profitable, accelerating business — carrying government concentration and a priced-for-perfection valuation. The risk is the price, not the company.