There is no shortage of popular artificial intelligence (AI) stocks. The AI investment theme has boosted many stocks, including energy companies, construction businesses, computing hardware providers, and software companies. Few have been as successful as Palantir (NASDAQ: PLTR). Palantir’s stock has had an incredible run since 2023 started, as the stock has risen by around 2,700%.

However, I think Palantir’s run could be over.

While Palantir’s business has rapidly expanded thanks to its incredible AI software offering, its stock has risen at an even faster pace. This has caused Palantir’s stock to become grossly overvalued, and I think it could be due for a serious correction in 2026.

Investor looking at their laptop in frustration.

Image source: Getty Images.

One distinction I want to make: Palantir’s software business is absolutely incredible and is a leader in its field. Primarily, Palantir’s software is used as an artificial intelligence-powered data analytics platform. Originally intended for government use cases, Palantir’s software eventually found a use case in the commercial sector. With two growth paths, Palantir has thrived during the AI build-out.

Regardless of which business division you look at, Palantir is growing rapidly. In the third quarter, Palantir’s commercial revenue rose 73% year over year to $548 million, and its government revenue increased 55% to $633 million. Palantir has to be doing something right to deliver that level of growth in both sectors, and it still has a fairly large market to conquer. In the U.S., it only has 530 commercial customers. Countless businesses could deploy Palantir’s software, giving it a huge growth runway in that market.

Another area where Palantir has lagged is international commerce. This has less to do with Palantir’s strategy and more to do with key locations, like Europe, and the slow pace of AI adoption. There’s no guarantee that this will change anytime soon, but it could represent another growth area for Palantir.

In Q3, U.S. commercial revenue increased 121% year over year to $397 million, adding $218 million of revenue over last year’s total. Commercial revenue as a whole added $231 million, so nearly all of Palantir’s growth is located in the U.S. Should something happen to the U.S. sector, Palantir’s growth case would be in trouble, but I don’t foresee anything slowing AI adoption in the U.S.

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