Palantir Is Up More Than 2,200% Since 2023. Can Its Run Continue?

There have been few better stocks to own since 2023 than Palantir (NASDAQ: PLTR). The stock is up by more than 2,200% since then, although it's now down by more than 25% from the all-time high it touched in October. But it has rallied in recent weeks from the 40% it was down.

With that rally in focus, investors may be wondering: Is Palantir primed to soar again, or is it just following the broader market's movements?

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Palantir has put up incredible growth figures

Palantir's software platform uses artificial intelligence (AI) to process large volumes of data quickly and give people with decision-making authority the best guidance possible in real time. Originally, this platform was used for government purposes only, such as supporting intelligence gathering and military operations. While this is still a large use case for Palantir's products, the company has also expanded into the commercial sector, where it has achieved significant adoption, particularly in the U.S.

Palantir is delivering impressive growth -- its revenue rose 70% year over year during its fiscal fourth quarter to $1.4 billion. Commercial revenue grew at an 82% pace versus government revenue growth of 60%, but both numbers are so impressive that it's hard to find fault in either of them. The best segment was (unsurprisingly) U.S. commercial, which rose 137% to $507 million. What's even more impressive is Palantir's total customer count. Palantir has 571 U.S. commercial clients, which is relatively small compared to the number of potential customers out there.

It's hard to find a fault in any of Palantir's results; they are truly impressive. The biggest issue most investors have with the stock is its valuation. Trading at a jaw-dropping 116 times forward earnings, Palantir is one of the more expensive stocks on the market. There is huge anticipated growth already priced into the shares.

For reference, Nvidia, which grew its revenue at a 73% pace during its fiscal Q4, which ended Jan. 25, trades for 22 times forward earnings. So, the price investors must pay to buy Palantir's stock is about 5 times what it takes to buy Nvidia.

Is that worth it?

For me, I say no. There are several years' worth of hoped-for growth baked into the stock price, and there are far more attractive options (like Nvidia) available. If Palantir can sustain its current growth rates for many years, today's price could still turn out to be worth paying, but the stock would have to trade sideways through several years of rapid business growth to get back into a normal valuation range. I'm not willing to bet on that optimistic outcome.

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.