Palantir’s Valuation Tightrope: A £330 Million NHS Contract Wobbles as Burry Bets on a Sub-$100 Crash

Palantir faces a stark disconnect between blistering revenue growth and a punishing stock correction, with Michael Burry betting on a decline below $100 as political headwinds mount in Europe.

Just weeks before Palantir reports first-quarter earnings, the software firm finds itself caught between blistering operational growth and a punishing market correction. The stock has shed more than 16% since January, trading near €120 — more than 30% below the November record high — even as revenue surges at a pace that would make most tech peers envious. The disconnect is stark, and it is drawing in some of Wall Street’s most famous bears.

Michael Burry, the investor who famously bet against the housing market before the 2008 financial crisis, has taken a short position against Palantir through put options. His wager targets a slide below $100 by year-end, with an even more aggressive bet on sub-$50 by mid-2027. In a now-deleted social-media post, Burry argued that simpler AI tools from rivals such as Anthropic are eating into Palantir’s market share, making its complex software harder to justify. Wedbush analyst Dan Ives dismissed the claim as a “fictional narrative,” but the damage was immediate — the stock briefly plunged nearly 14%.

The bearish case is not hard to construct. Palantir trades at roughly 110 times forward earnings, leaving almost no margin for error. The company’s own guidance calls for revenue of about $7.2 billion this year, a 61% jump from last year’s $4.5 billion, which itself represented 56% growth. Those numbers are impressive, but the valuation means any stumble could trigger a sharp re-rating.

Yet the bull case is equally compelling. The DZ Bank recently initiated coverage with a buy rating and a $175 price target, pointing to the company’s rare combination of rapid expansion and high profitability. In the fourth quarter alone, US commercial revenue more than doubled, rising 137%, while government contract revenue climbed 66%. The commercial side of the business, particularly in the domestic market, is now the engine driving the narrative.

That narrative faces a real test on May 4, when Palantir reports first-quarter results. The market will scrutinise whether the commercial US momentum can sustain the ambitious full-year target. If growth disappoints, the stock’s rich multiple leaves little room for forgiveness.

Across the Atlantic, political headwinds are building. The Metropolitan Police in London is exploring a major expansion of its use of Palantir’s software to automate crime-data analysis, building on existing experimental tools used to detect internal misconduct. But a far larger deal — the £330 million contract with the National Health Service — is under threat. Health minister Zubir Ahmed has not ruled out switching to a competitor, and an exit clause becomes available in spring 2027. Parliamentary criticism is mounting, with committee chair Chi Onwurah calling privacy concerns “legitimate and substantial,” rejecting Palantir’s claim that the opposition is purely ideological. The company would retain no software rights after the contract ends, adding to the unease.

Burry, meanwhile, is rotating his portfolio. He has opened new positions in Salesforce and MSCI, a move analysts interpret as a bet on traditional enterprise software that has been sold off heavily in the recent SaaS rout. The sector-wide weakness was triggered by disappointing results from ServiceNow, raising fears of a broader valuation correction across software stocks.

For Palantir, the coming weeks are a high-stakes balancing act. The company must prove its commercial US growth is not a one-quarter wonder, fend off political pressure in the UK, and convince the market that a 110-times earnings multiple is justified. With Burry waiting in the wings and a key earnings report looming, the next move belongs to management.