Microsoft and Palantir both hit 52-week lows in 2026, with Microsoft down 20% and Palantir down 31% year to date. Despite the sell-off, both companies posted strong AI-driven growth in their most recent quarters, though their valuations diverge sharply.
Microsoft and Palantir Technologies have both hit 52-week lows in 2026, a sharp reversal for two stocks that ranked among the market's best performers from 2023 through 2025. Microsoft is down 20% year to date, while Palantir has fallen 31%.
AI drives both companies
Microsoft has pushed to build an AI-first approach across its product range. It rolled out Copilot, its generative AI assistant powered by OpenAI's ChatGPT, into its business productivity software, and that unit's revenue rose 123% year over year to $37 billion in annual recurring revenue. Its Azure cloud platform saw revenue rise 40% in its most recent quarter.
Microsoft also owns around 27% of OpenAI, setting it up for a huge payday when that company eventually goes public, likely at a $1 trillion valuation or greater. Palantir, focused on AI since its founding, is nearing a 50-50 split between government and commercial revenue. Its AIP generative AI platform, which automates workflows, drove revenue up 85% year over year in its most recent quarter.
Valuations diverge
The two companies part ways on price. Using forward price-to-earnings ratios against an S&P 500 baseline of 21.5, Microsoft trades at 20 times forward earnings — a discount to the index. Palantir, by contrast, trades at 85 times forward earnings.
At that level, Palantir would need to quadruple its earnings beyond 2026's projected growth to reach the same S&P 500 multiple. Motley Fool contributor Keithen Drury calls Palantir an excellent company with great growth prospects but far too expensive to own right now, while noting Microsoft rarely gets this cheap.
Source: The Motley Fool
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