Palantir stock dropped another 7% on Wednesday after a 9% decline in prior trading session. Other AI software stocks also fell. SOUN down 9%; Tempus AI down 7%; Unity down 6%; C3.ai down 5%; Duolingo down over 4%; BigBear.ai down over 3%.

Palantir Technologies Inc. has been one of the biggest artificial-intelligence winners in 2025, but there's reason to believe investors may have gotten way ahead of themselves.

That's according to the famed short-seller and Citron Research founder Andrew Left, who said on Fox Business last Wednesday that Palantir's stock was grossly overvalued.

Left had fresh criticism for the stock on Monday, calling Palantir "a company now detached from fundamentals and analysis."

Palantir's stock has run up an impressive 130% so far this year, to make it by far the S&P 500 index's SPX best 2025 performer. The lofty price tag comes with a eye-popping price-to-earnings ratio of 588x, based on the past 12 months of earnings, according to FactSet data, which compares with a P/E ratio of 58x for AI leader Nvidia Corp. Bullish investors have defended the valuation by pointing to Palantir's exclusive government contracts and its Artificial Intelligence Platform product offering.

In a Monday note, Left argued that if Palantir traded at similar valuations to AI-industry leader and privately held OpenAI, the stock would see a 77% decline from current levels.

OpenAI is preparing a secondary sale of $6 billion in stock that would give it a $500 billion valuation, CNBC confirmed last Friday. Bloomberg has also reported that OpenAI expects to achieve $29.4 billion in revenue in 2026. That means the ChatGPT creator is valued at roughly 17 times forward sales. Meanwhile, Palantir is expected to do $5.6 billion in revenue in 2026, according to FactSet. Applying the same multiple to Palantir's sales metric would yield a share price of $40.

Even a $40 share price would be "generous," according to Left, as "Palantir would be fortunate to achieve the same valuation multiple as OpenAI."

"It should be noted that even at a 17x sales multiple, OpenAI has the highest multiple of any scaled [software-as-a-service] stock in the world, and that number in itself is extreme. This means that at $40, [Palantir] would still be expensive," Left said.

Left certainly doesn't believe Palantir is on par with OpenAI. In his view, Palantir's contract-based revenue is lumpier and more difficult to scale than OpenAI's widespread subscription model. Palantir also faces competition from other software companies such as Microsoft Corp. $(MSFT)$ and Databricks.

Left acknowledged that the stock could certainly continue to climb in the coming months. After all, markets can remain irrational longer than you can remain solvent. But if Left's predictions are correction, Palantir's stock could have a long way to plummet.