Palantir's AI Platform Drives Impressive Growth and Valuation Concerns

Palantir Stock Investors Just Got Great News From a Top Wall Street Analyst | The Motley Fool

Palantir Technologies (PLTR -4.48%) was one of the hottest artificial intelligence stocks on the market last year. Its 340% return in 2024 made it the single best-performing member of the S&P 500 (^GSPC -1.46%). However, Dan Ives at Wedbush Securities sees the stock moving even higher. And he recently gave shareholders two reasons to be thrilled: Importantly, investors should neither buy Palantir stock simply because Ives recommends it, nor should they dismiss his conviction in Palantir without due consideration. Ives ranks among the top 15% of Wall Street analysts in terms of how often his price targets result in profits. Palantir specializes in data analytics. Its core products, Gotham and Foundry, are operating systems that integrate information into an ontology that improves organizational decision-making. To elaborate, an ontology is a framework that connects digital information to real-world objects and defines the relationship between them. By querying ontology data with analytical applications, businesses can surface important insights. In 2023, Palantir introduced its artificial intelligence (AI) platform, called AIP, which added natural language processing capabilities to Gotham and Foundry. In other words, AIP lets businesses apply generative AI to their operations. For instance, retailers using Foundry to forecast demand and optimize inventory could prompt the platform in natural language to automatically order products as needed to avoid out-of-stock incidents. Dan Ives says AIP is a "launching pad of AI use cases," and other industry observers have praised the product as well. Most notably, Forrester Research last year ranked AIP as the best AI platform on the market, awarding it better scores for its current capabilities than similar products from Alphabet's Google Cloud, Amazon Web Services, and Microsoft Azure. Analysts wrote, "Palantir has succeeded in making a powerful platform with friendly tooling for multiple user types." Dan Ives praised Palantir's third-quarter financial report as a "masterpiece." Revenue rose 30% to $726 million, the fifth consecutive sequential acceleration, driven by strong growth across the commercial and government segments. And non-GAAP net income increased 43% to $0.10 per diluted share. The company also raised its full-year guidance, such that revenue is now projected to increase 26% in 2024. CFO Dave Glazer attributed the strong quarter and upbeat outlook to demand for AIP. "Our U.S. commercial business continues to see unprecedented demand, with AIP driving both new customer conversions and existing customer expansions," he said on the third-quarter earnings call. Palantir has also made important announcements since the quarter ended. In December, the company was granted FedRAMP High Authorization across its entire portfolio, meaning government customers can use any of its software products to "process the most sensitive unclassified workloads." Subsequently, Palantir won a $619 million contract with the U.S. Army, and a $37 million contract with U.S. Special Operations Command. Dan Ives says he has attended several AIP Bootcamps, interactive workshops hosted by Palantir where prospective customers learn to use the artificial intelligence platform on actual use cases. Based on his observations at those events, Ives believes no other company has a product that can compete with AIP. However, most Wall Street analysts think the stock is wildly overvalued. The median target price is $39 per share among the 23 analysts that follow the company, which implies 51% downside from its current share price of $79. In general, the reason for that pessimism is valuation. Palantir trades at 225 times adjusted earnings, which looks absurd when earnings are only projected to grow at 29% annually through 2025. But Ives in a recent interview with Yahoo Finance said, "You can't just look at [the stock] in terms of what it trades at for next year." Instead, he believes investors should ask themselves what Palantir could be worth three to five years from now. For his part, Ives thinks Palantir could grow into the next Oracle during that period. Personally, while I completely agree with the long-term mindset Ives is promoting, I also think investors should be cautious buying Palantir at its current valuation. Even if the company is on track to become a $500 billion software giant, I think the stock will suffer a major correction between now and then, which means there may be more attractive buying opportunities in the future.

Is Palantir Stock a Buy Now? | The Motley Fool

In terms of performance, Palantir Technologies (PLTR) was one of the hottest stocks of 2024. The stock price soared 340% last year while joining both the S&P 500 and Nasdaq-100 indexes. Given that it has already had such a strong run, investors may be wondering if the stock is still a buy. Let's investigate. Palantir originally made its mark as a data gathering and analytics vendor primarily serving the U.S. government. Its technology was able to detect patterns, particularly in the area of money flow, that were not easily recognizable and make predictions based on those patterns. This made it an ideal counterterrorism tool. Today, Ukraine is using Palantir's technology in its war against Russia to monitor troop movements and help identify targets like tanks and artillery. Palantir's largest customer, the U.S. government, has been going through a period of slow growth, but growth has started to pick up as the government has begun to embrace artificial intelligence (AI). Last quarter, Palantir's U.S. government-related revenue soared 40%, a big jump from the 14% growth for all of 2023. However, it is the success the company has been seeing in the commercial realm that has excited investors the most. The company launched its AI platform in 2023 and has seen tremendous uptake. Last quarter, its U.S. commercial revenue soared by 54% while its U.S. commercial customer count surged by 77%. While many large tech companies have been creating ever-improving individualized models to take advantage of the opportunity in AI, Palantir is taking a different approach. It ultimately thinks that AI models will become largely similar in terms of performance. Because of this, it has been focusing on the application and workflow layers of AI, where it hopes to become the central AI operating system for its clients. Its AI platform helps with logic and functionality to provide the actions needed to finish tasks. Palantir has tools to rigorously test the solutions made through its platform to make sure they'll work in the real world. You've probably heard of well-documented instances of AI making some pretty big mistakes. This was seen in the early days with Alphabet's Google AI Overviews telling users to put glue on pizza, or more recently with Apple Intelligence sending out wildly inaccurate news alerts. These errors are called AI hallucinations, and they need to be very rare if AI is to be useful. Thus far, much of Palantir's early commercial success has come from proof-of-concept work for customers. The company has attracted a lot of new customers through its AI boot camps, where it trains people in applying AI to crucial operations. The next step is taking all these new customers and moving them from proof-of-concept work to production. Given how many new customers Palantir has been gaining, this is a huge opportunity. The big knock on Palantir is its valuation. The stock's huge rise has led it to trade at a forward price-to-sales (P/S) multiple of 42. That's a huge multiple for a stock that grew its overall revenue by 30% last quarter. To put it into context, that's about double the peak software-as-a-service (SaaS) multiples from a few years ago when the sector was growing by over 30%. The company will have to grow its revenue much more quickly than it is now, and for a long time, to justify its current valuation. That is possible, given the opportunity it has to move customers from prototype work to production, but it currently isn't in its forecast or analyst estimates. Palantir guided for revenue growth of between 26% to 27% for the fourth quarter, while analysts are currently projecting revenue growth of 25% in 2025. Meanwhile, the company has seen executives and other company insiders dump a lot of shares over the past few months. The insider selling really started to pick up in mid-September, when the stock was trading in the mid-$30s. Sellers included CEO Alex Karp, Chairman Peter Thiel, and Chief Technology Officer Shyam Sankar, among others. Meanwhile, there is the question of whether the waste-cutting initiative that President Donald Trump calls the Department of Government Efficiency (DOGE), which aims to cut government spending, could impact Palantir's growth. One argument is that the government will invest in software from companies like Palantir to help improve efficiency, while the other is that spending will be cut across the board, including for software. Right now, the outcome is unknown. Overall, while I think Palantir the company is poised to be a long-term winner, the stock's valuation is too rich at the moment for me to consider it a buy.

Should You Buy Palantir Stock Before Feb. 3? | The Motley Fool

Palantir Technologies (PLTR) was one of the top artificial intelligence (AI) stocks of 2024. It rose 340% in 2024 but has been fairly flat in 2025. Palantir was such a dominant stock in 2024 that many investors are curious if it can have a similar run in 2025. After all, Nvidia (NASDAQ: NVDA) taught many investors that a multiyear rise is entirely possible. On Feb. 3, Palantir reports fourth-quarter earnings, which will provide an important update on the current state of the business and outline what management expects for 2025. This important date could send the stock soaring or give investors reasons to sell. Palantir's rise is directly tied to the success of its AI platform. For a long time, Palantir has been providing AI software that aids in real-time decision-making. Originally, its software was intended for government use, but it also found success in the commercial sector. Government revenue is still Palantir's largest segment, making up 56% of revenue. The latest growth wave Palantir experienced is primarily due to its Artificial Intelligence Platform (AIP) product. Palantir considered AIP to be the next phase of AI implementation. AIP gives its users tools to integrate AI models directly into a business's inner workings and set up AI agents to perform tasks that humans would normally have to do. AIP saw the largest adoption in the U.S. commercial sector, which grew massively in 2024. In Q3 alone, U.S. commercial revenue was up 54%. Management expects AIP's success to eventually spread to government divisions and internationally, boosting those revenue growth rates as well. Overall, revenue grew 30% year over year to $726 million, and management gave guidance for Q4's revenue to be between $767 million and $771 million, indicating a growth rate of 27%. While growth is projected to slow on a quarter-over-quarter basis, Palantir's management has a track record of beating projections on a regular basis. However, Q4 results will likely be overlooked in favor of 2025 projections, and what happens then is anyone's guess. While management hasn't given any indications about what to expect from 2025, Wall Street analysts project revenue growth to slow to 25%. That's a problem, as Palantir's stock price indicates that it needs far more growth to support it. Palantir's stock is one of the most expensive in the market, trading for 365 times trailing earnings and 127 times forward earnings. Palantir's profit margin reached 20% for two consecutive quarters, so an earnings-based valuation measure is the best way to perform this analysis. Those levels are incredibly high, and few companies have sustainably traded at these valuations. Take Nvidia, for example. Since 2023, the stock never traded for more than 247 times earnings, but spent most of its time trading between 60 and 80 times earnings (it only traded that high in early 2023 when weak quarters from 2022 were included in the trailing-12-month earnings total). During that period, Nvidia was tripling its revenue each quarter, not growing at a 30% pace like Palantir is. This showcases how expensive Palantir's stock is, but there's an even more telling analysis. Let's say Palantir's growth rate defies what Wall Street thinks it will do and grows at a 35% year-over-year pace for the next five years while maintaining its 20% profit margin. If it does that, five years from now, it will trade at 70 times trailing earnings. That's more than five years of growth baked into the stock price at today's valuation, which is a huge problem for future returns. Unless Palantir's management gives an unbelievable projection of 40% to 50% revenue growth for 2025, its stock is likely highly overvalued. As a result, I don't think investors should buy Palantir stock before Feb. 3; instead, they should consider selling some.

Should You Buy Palantir Technologies Stock Before Feb. 3? | The Motley Fool

Palantir Technologies (PLTR) was one of the hottest stocks of 2024, rising by a staggering 340%. A $15,000 investment in the data analytics stock at the start of the year would have been worth more than $66,000 by the end of it. A big reason for Palantir stock's impressive performance is the exciting revenue growth the business has been generating. Using artificial intelligence (AI), its data analytics platform has unlocked new ways for government and commercial customers to automate their processes and enhance their decision-making. With CEO Alex Karp seeing a lot more growth coming in the future, investors have been eager to buy up shares of the business. Palantir reports its next round of earnings numbers on Feb. 3. Should investors buy the stock before that happens? Palantir's Artificial Intelligence Platform (AIP) has proven to be a huge catalyst for the business. The company has been showing potential customers -- through what it calls boot camps -- the value that its platform can have for businesses, and sales have been taking off as a result of strong AI-related demand. In fact, Palantir's already high level of revenue growth has been accelerating in recent quarters. When the company last reported earnings in November, Karp said that demand was "unrelenting" and that the company "absolutely eviscerated this quarter," with revenue growing at a rate of 30% year over year. Karp has been hyping up the business, and that means expectations will be high for Palantir when it releases its results on Feb. 3. But even if it can deliver, that may not be enough to send the stock soaring. Shares of Palantir are down just over 5% to start the new year as I write this. That's not a huge sell-off by any means, but it could be a sign that perhaps the feverish excitement around the stock is starting to wane. The biggest problem for the AI stock is undoubtedly its valuation. Although Palantir's earnings have been growing, the stock is still incredibly expensive and is trading at around 150 times next year's expected profits. Even if you take a longer-term view, its price/earnings-to-growth (PEG) multiple is more than 3. Typically, a growth stock is viewed as a cheap buy if its PEG ratio is below 1, and Palantir is nowhere near that. The caution for those looking at the short term is that even if Palantir's growth rate has accelerated yet again, that may not be enough to trigger a big rally for the stock. That's because at such a high premium, a lot of growth is already priced into its valuation. Unless Palantir massively beats earnings expectations and provides glowing guidance for the rest of the year, there's the possibility that it's stock could still fall in value in the short term. At its current valuation, Palantir's stock looks to have a lot more downside risk than possible upside. Palantir's upcoming earnings numbers may help tell investors two important things. The first is whether Palantir's growth is truly unrelenting and still going higher. The second is whether the market is starting to cool off and if Palantir's valuation is becoming more of a concern for investors. If the company delivers a strong quarter and the stock doesn't rally, it could be further confirmation that there's some growing hesitancy around the stock's high price.

Could Buying Palantir Technologies Stock Today Set You Up for Life?

Palantir Technologies (PLTR 1.81%) went public with a direct listing on the stock market in September 2020, and shares of the software platforms and data analytics provider delivered healthy gains since then. Palantir stock is up 655% since making its stock market debut. However, all of Palantir's stellar gains have arrived in the past couple of years, driven by the company's move into the artificial intelligence (AI) software platforms market. It is worth noting that Palantir was underperforming the broader market before its move into AI. Investors bought Palantir stock hand over fist over the past couple of years, leading to eye-popping gains of 966% during this period. So, an investment of $1,000 made in Palantir two years ago is now worth more than $10,600. The good part is that Palantir is scratching the surface of a massive end-market opportunity in the AI software platforms space, which could help investors become richer in the long run. Of course, putting all your money into just one stock in the hope that it will become a big winner isn't ideal, as any negative development at Palantir could lead investors to experience massive losses. However, buying Palantir as a part of a well-diversified portfolio could be a smart move. Let's look at the reasons why. Palantir's growth is just getting started Palantir consistently ranks among the top providers of AI software platforms by market research firms IDC and Forrester. So, it is not surprising to see why the interest in Palantir's Artificial Intelligence Platform (AIP), which helps organizations and governments embed AI into their operations, increased remarkably in the past year. On its November 2024 earnings conference call, Palantir management provided several instances of how AIP is enabling its customers to make their business processes more efficient. As a result, customers are now signing bigger contracts to deploy AIP into more areas of their business, boosting the company's unit economics in the process and enhancing its margins. This explains why Palantir's total contract value (TCV) from commercial customers increased an impressive 52% year over year to $612 million. That was higher than the 51% year-over-year increase in Palantir's commercial customer count for the quarter. Palantir's commercial TCV increased at a faster pace than the 30% year-over-year jump in its quarterly revenue to $726 million, suggesting that the company is building a solid revenue pipeline for the future. The good part is that Palantir's AIP-driven growth is just getting started. That's because the AI software platforms market is expected to generate annual revenue of $153 billion in 2028 as compared to $27.9 billion in 2023, according to IDC. The market research firm is projecting an annual growth rate of 40.6% for this market, and the growth of Palantir's commercial business last quarter is a clear indication that it is growing at a faster pace than the end market. Palantir seems to be gaining a bigger share of the market, which should pave the way for stronger growth in the long run that could be better than what analysts are projecting. Palantir is expected to report 26% revenue growth for 2024 to $2.8 billion, followed by 25% growth in 2025 and an estimated 21% increase in 2026. However, Palantir could easily grow at a faster pace than those expectations as AI is accelerating its growth. The company's revenue in the first quarter of 2024 increased 21% from the year-ago period, followed by a 27% increase in Q2. So, the company's Q3 growth improved further, and that trend is likely to continue, given the bigger deals that Palantir is now being able to crack thanks to AI. Is the stock worth buying right now? The biggest concern for anyone looking to buy Palantir right now is the valuation. The stock is definitely not cheap as it is trading at a whopping 359 times earnings. However, its forward earnings multiple of 149 points toward a massive increase in earnings. So, Palantir may not be an ideal bet for investors looking for value. However, growth-oriented investors can still be interested in buying it as its accelerating growth, improving share, and the huge AI software platforms market could supercharge its business significantly going forward and help it justify its expensive valuation.

Palantir Technologies Stock: Buy, Sell, or Hold? | The Motley Fool

Palantir Technologies (PLTR 2.75%) cemented its place as a leader in artificial intelligence (AI) innovation following a breakout year in 2024. The company successfully expanded beyond its traditional focus on national security applications for government agencies, leveraging its AI technology and big data analytics to deliver solutions for commercial customers. This shift, coupled with strong growth and accelerating profitability, propelled the stock to a spectacular 349% gain in the past year. With market optimism surrounding Palantir's momentum heading into 2025, can the rally continue, or has the opportunity already passed? Let's discuss what to do with the stock now. Palantir stands out for its expertise in data integration and analysis software, excelling at connecting vast datasets from various sources and enabling organizations to create unified data ecosystems for improved decision-making. The company's breakthrough came with the 2023 launch of its Artificial Intelligence Platform (AIP), which applies large language models, machine learning, and generative AI to enhance analytical capabilities. AIP's ability to automate tasks and create custom workflows with predictive, actionable insights is highly popular across numerous industries. The trends have been impressive. In the third quarter, revenue increased by 30% year over year, while adjusted earnings per share (EPS) of $0.10 rose 43% from the prior-year quarter. Beyond these headline numbers, key performance metrics reveal an even stronger picture. In the United States, enterprise-level commercial customers surged 77% to 321, propelling U.S. commercial segment revenue up 54%. The trajectory suggests a significant runway for high-margin commercial applications in the U.S. to further boost profitability, with an even larger untapped opportunity internationally. Co-founder and CEO Alex Karp described the results as driven by "unrelenting AI demand that won't slow down," emphasizing that the growth is only beginning. The company is guiding for full-year 2024 revenue of around $2.8 billion, representing a 26% increase from 2023, which will be confirmed in the upcoming fourth-quarter earnings report set to be released on Feb. 3. According to Wall Street analysts, 2025 is positioned to be another record year, with the EPS target of $0.48 representing a 26% increase from the current 2024 estimate of $0.38. Investors confident in the company's outlook and market potential have compelling reasons to buy the stock. Data source: Yahoo Finance: YOY = year over year. While there's a lot to like about Palantir's high-growth outlook, it's a smart idea to take a critical look and examine potential risks. One area of uncertainty is how the market opportunity for AI-powered data analytics will evolve. Palantir carved out an early leadership position but other tech giants, including players in the big data space, are likely to incorporate similar AIP features for specific use cases to capture new business. Another concern is Palantir's valuation. Shares are trading at 159 times the current consensus 2025 EPS, well above the average forward price-to-earnings (P/E) ratio for a peer group of AI leaders. Companies like International Business Machines with a forward P/E of 21, Alphabet at 22, Microsoft at 34, or even SAP at 43 are a bargain by comparison. On one hand, Palantir's earnings premium could be justified based on its exceptional operating and financial momentum. Still, it could pose a problem for shareholders in a scenario where results begin to underwhelm against high expectations. Investors who believe Palantir has reached peak growth and will face competitive storms on the horizon could consider selling the stock today. Balancing the pros and cons of investing in Palantir, I believe the stock's current valuation makes it difficult to buy with conviction. There are likely enough strong points for shareholders to hold but investors who missed the recent rally may find more compelling opportunities elsewhere in the stock market. The silver lining is that patience could reward investors, as the possibility of a market correction might offer an opportunity to acquire shares at a lower and more attractive price.

Is Palantir Technologies a Buy?

Has there been a bigger artificial intelligence (AI) winner than Palantir Technologies (PLTR 5.20%)? The company has thrived on the accelerating demand for AI software and applications, fueling rabid demand for its stock. Shares are up a whopping 330% over the past year alone. Recently, the stock has pulled back and is currently about 10% off its high. Is this a buy-the-dip opportunity or the early stages of a bubble bursting? Palantir has a legitimate runway for years, perhaps decades, of growth. However, much-needed context could impact whether you buy shares. Is Palantir a buy? Let's find out. Palantir is emerging as a juggernaut in AI software Much of the attention on artificial intelligence focuses on generative AI, the companies developing AI models, and the chip companies powering them. However, an entire market exists for organizations and companies that want to apply AI to specific aspects of their work. That's where Palantir thrives. The company has a long history of developing custom data analytics software for government entities and enterprises. It took the natural leap into AI software when it launched its AIP platform in mid-2023. Since then, Palantir's growth has continually accelerated: PLTR Operating Revenue (Quarterly YoY Growth) data by YCharts Palantir's software technology is uniquely flexible and applicable to almost anything. The U.S. government is its largest customer and has used it for various applications, ranging from military operations to coordinating the response to COVID-19 during the pandemic. In the private sector, Palantir's AI software is helping operate hospitals efficiently, optimize supply chains, and much more. While nobody knows how much Palantir's revenue growth will continue to accelerate, it's clear the company could sustain brisk growth for the foreseeable future. Such flexible software means a vast customer base. In that sense, Palantir is only getting started. The company ended Q3 2024 with 629 total customers. There are hundreds of thousands of large enterprises and public organizations worldwide. Even if Palantir works with a few thousand of them over the years, that means multiplying its current user base. Besides, I'd argue that's probably setting a very low bar. Individual investors may find it challenging to discern competitive advantages in complex software companies. The fact that the U.S. government has worked with Palantir for over a decade and continues to award it new business speaks volumes about Palantir's technology and how it stacks up against others. Why the stock's recent dip may continue No matter how great the underlying company is, it shouldn't be a shock that a stock may cool off after rising 330% in 12 months. This could be a short breather before the stock continues higher, but I'd be careful here. Palantir's share price has outpaced the company's growth, pushing its price-to-earnings ratio to nearly 360. That's among the highest valuations on the market for any company. While analysts expect strong long-term earnings growth (27% annualized), it's nowhere near enough to justify such a high price. PLTR PE Ratio data by YCharts Palantir's PEG ratio is a hefty 13. For reference, I generally buy high-quality stocks at PEG ratios up to 2 to 2.5. Even if Palantir grows earnings twice as fast as analysts anticipate, the PEG ratio would still be too high at 6.6. Is Palantir a buy? The bottom line is that Palantir will have difficulty meeting the sky-high expectations reflected in its current stock price. The likely outcome is that the stock will dramatically decline to a more reasonable valuation or go nowhere for a long time while the business grows and catches up. Either way, Palantir is not a buy today. Remember that stock prices can do funny things, sometimes for longer than you'd expect. However, fundamentals and valuations are like gravity. They pull on a stock harder as prices get further out of line. Palantir's extreme valuation could last for a while, but gravity always wins eventually.

Is It Too Late to Buy Palantir Stock in 2025? | The Motley Fool

It has been quite the roller-coaster ride for Palantir (PLTR) shareholders in the past few years. After going public in 2021, the stock experienced an 80% drawdown in the 2022 bear market. Since then, it has clawed its way back with a vengeance. Shares have risen close to 500% in the past three years, making Palantir one of the best-performing stocks in the market. Why? Two words: artificial intelligence (AI). Palantir is a software and services provider of AI tools to the government, military, and big business. Everyone loves AI stocks right now, and it's seeing increasing adoption and contract wins that are driving the stock higher. But are investors who buy in 2025 too late to the party? Let's dive into Palantir stock and see if it's a buy for your portfolio this calendar year. Palantir's software uses AI and other analytical tools to help large organizations garner insights from their data. Its custom solutions are catered to organizational needs. For example, it has contracts with the U.S. military, CIA, and other government agencies. Last quarter alone, U.S. government revenue was $320 million and growing 40% year over year. It looks like this growth is set to continue as the company is signing huge federal contracts. One example is a recent $618 million deal with the U.S. Army for a period of up to four years. The U.S. government -- one of the largest organizations in the world -- has a sprawling set of data sources that can be challenging to manage, and it's willing to pay Palantir a pretty penny to organize and analyze it. To expand its addressable market, Palantir has shifted its focus to selling its AI tools to large enterprises as well. Using the government's confidence in Palantir as a selling point, management has made inroads marketing its services to large companies. U.S. commercial revenue was Palantir's fastest-growing segment last quarter, up 54% year over year to $179 million. With less than $200 million in quarterly revenue from its U.S. commercial segment, Palantir has a long runway of growth in this market. Last quarter alone, it closed 104 deals worth over $1 million and grew its customer count 39% year over year. Software and analytical tools are sticky and usually see growing spend from customers over time. As Palantir wins new customers, its growth should accelerate and help consolidated revenue march higher over the next five years. On the profitability front, Palantir has a lot of room for improvement. Over the last 12 months, its operating margin was only 13%. To be fair, this is a big improvement from years past and is low due to Palantir's reinvestment for growth, but it's still lower than most software businesses. With a gross margin consistently above 75%, I expect Palantir's operating margin to expand past 20% and eventually 30% in the next five years. This will help its bottom-line profits soar once this business starts maturing. Thanks to its recent gains, Palantir sports a market cap of $180 billion, making it one of the 100 largest companies in the world. It's shocking when you fully consider how a software company with just $2.6 billion in trailing-12-month revenue is one of the biggest companies on earth, at least by market capitalization. Like its share price, its price-to-sales ratio has soared to 72, making it the most expense stock in the S&P 500 by that metric. That's why it's indeed too late to buy Palantir stock in 2025. If the company grows its revenue 40% annually over the next five years, its revenue will hit $15 billion in 2029. Assuming its net income margin can expand to 30% by that time, the company would generate $4.5 billion in annual earnings. This is a very optimistic scenario, one I think is unlikely to even occur (though that doesn't mean Palantir won't grow earnings over the next five years). But even based on this bullish outlook for earnings of $4.5 billion versus its current market cap of $180 billion, Palantir trades at a forward price-to-earnings (P/E) ratio of 40. Put simply, even if Palantir puts up 40% annual growth through 2029 and expands its profit to 30%, it still trades at a premium to the broad market based on that outlook. Expectations are sky high for the stock, and price matters when investing. The hype around Palantir is just too much, and investors should stay away, at least for now.