This Artificial Intelligence (AI) Stock Just Beat Earnings Estimates. Is It a Buy?

Palantir Technologies (NASDAQ: PLTR) is arguably on a generational run. The stock has been an absolute rocket, soaring more than 1,660% over the past three years.

The company recently closed out its fiscal year 2025 with fourth-quarter earnings, and Palantir delivered in a big way. Revenue came in at $1.41 billion, versus analyst estimates of $1.33 billion, while earnings per share of $0.25 topped estimates of $0.23.

Additionally, Palantir issued a massive growth guide for 2026. Its expected full-year revenue of $7.182 billion to $7.198 billion represents as much as 60.8% growth. Thus far, Palantir stock and its shareholders have mostly left its doubters in the dust. Is the stock a buy now?

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The hype continues to rise, and Palantir continues to deliver

Wall Street continues to struggle to wrap its arms around Palantir. The company has topped quarterly revenue and earnings estimates more often than not these past few years.

Data by YCharts.

Palantir is sitting pretty in this AI boom. It specializes in developing custom software applications that ingest data and analyze it using AI and machine learning. That can mean optimizing complex supply chains or efficiently distributing a vaccine during a pandemic.

The company has a long-standing and lucrative relationship with the U.S. government, which contributed $1.855 billion to Palantir's top line in 2025. Palantir has also rapidly grown its commercial business, especially since launching its AIP platform for AI applications in 2023.

Palantir's commercial business grew by a staggering 137% year over year in the fourth quarter, and it still has just 571 commercial customers in the United States. With how useful Palantir's software is across a wide range of industries and use cases, the company could sustain impressive growth well into the future.

But the stock is not a buy right now. Here's why.

Stocks generally aren't cheap after going up more than 1,660%. Ironically, Palantir isn't even at its high; shares have slipped more than 32% from their November 2025 peak. Yet the stock still trades at about 45 times its 2026 revenue guide.

Sure, Palantir is operating at a very high level right now. It deserves to trade as one of the most expensive stocks on the market. At the same time, Palantir's market cap has pushed beyond $320 billion. Such a large stock with a steep valuation is vulnerable to a sharp decline at the mere hint of slowing growth.

And while Palantir Technologies isn't like most software companies, the broader technology landscape is facing increasing uncertainty as investors grapple with AI's improving capabilities. Investors can nibble on the stock, but it's not a clear buy at its current valuation, and those who hold on to some cash may see better buying opportunities down the road.

Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.