Palantir Is Growing at a Jaw-Dropping Rate, but Is the Stock a Buy?
Key Points
Palantir's U.S. business segment doubled year over year in Q1 and is highly profitable.
The market already knows about this growth, and the stock has years of growth baked into its price.
- 10 stocks we like better than Palantir Technologies ›
Few companies are doing as well as Palantir Technologies (NASDAQ: PLTR). It just announced another impressive quarter, with revenue growth coming in at an outstanding 85% year over year. With a growth rate like that, it may seem like the sky is the limit for Palantir, but growth isn't everything with a stock. There are several considerations investors must account for when examining a stock, and growth is only one of them.
So, is Palantir stock a buy right now?
Will AI create the world's first trillionaire? Our team just released a report on the one little-known company, called an "Indispensable Monopoly" providing the critical technology Nvidia and Intel both need. Continue »
Image source: Palantir.
Along with strong growth, Palantir is also highly profitable
Palantir's growth rate is admittedly impressive. Its commercial segment more than doubled year over year, with revenue rising 104%. Palantir maintains a dual-sided business, with nearly half of its revenue from government clients and the other half from commercial. Both of these client bases are important, and the strength of each showcases the flexibility and performance of Palantir's AI-powered data analytics software.
But revenue isn't everything; if Palantir is operating at a loss to push its product into the hands of more users, this growth rate becomes less impressive. However, Palantir is also extremely profitable. In the first quarter, its GAAP profit margin was an impressive 53%. That's among the best profit margins I've ever seen from a software company, further underscoring that Palantir is one of the highest-performing software companies.
But what about Palantir's valuation? With all this success, a high valuation has come, and it's my one gripe against the stock. The best investments bought at the wrong price can still be bad investments, and Palantir is right on the borderline. Currently, Palantir trades for about 93 times forward earnings and 154 times trailing earnings.
Data by YCharts.
So, even after Wall Street analysts project a very strong year for Palantir, its stock will still be pricey. There aren't many examples of profitable companies growing as quickly as Palantir is, so the best comparison I can point to is Nvidia.
During its latest quarter, Nvidia's growth rate was 73%, and it trades for 45 times trailing earnings and 26 times forward earnings. Palantir's profits would need to triple to trade in the same range as Nvidia, indicating several more years of strong growth are already priced into the stock.
As a result, I still think it's best to avoid Palantir's stock, as expectations remain incredibly high, with several years of strong growth already baked in.
Should you buy stock in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you’d have $472,744!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $1,353,500!*
Now, it’s worth noting Stock Advisor’s total average return is 991% — a market-crushing outperformance compared to 207% for the S&P 500. Don't miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.
See the 10 stocks »
*Stock Advisor returns as of May 13, 2026.
Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Recommended Articles
