Can Palantir Reach $207 per Share to Claim a New All-Time High Before 2026 Is Over?

Palantir Technologies (NASDAQ: PLTR) had a very warm reception following its second-quarter earnings. The stock traded at nearly $120 per share, then skyrocketed to over $160 per share in the days following earnings. Still, it's way off its all-time high of $207 per share established last year.

Could Palantir reach a new all-time high before 2026 is over? Let's take a look.

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Palantir is a key partner for those wanting to deploy AI

Palantir has been in the AI game longer than most and has been an AI-first company since its founding in the early 2000s. Originally a government-focused business, it now has software for both commercial and government applications. Palantir got a huge business boost as AI became more mainstream over the last few years, with its integration of generative AI making the software more popular.

All of this has translated into a massive growth rate for Palantir. In Q2, companywide revenue grew at a 93% year-over-year pace to $1.9 billion. The U.S. part of its business has a particular strength, with U.S. commercial revenue rising 149% year over year and U.S. government revenue rising 90%. Those are some impressive figures, but there is one metric that I think really defines Palantir as a company: its net income margin.

Palantir isn't some growth-at-all-costs company; it's generating real profits. In Q2, its net income margin was an impressive 55%. Few companies ever reach this level, and for Palantir to do it while it's growing showcases that the product is basically selling itself. That's a great place to be, and investors really can't ask for much more.

So, why is the stock down around 25% from its all-time high? It all boils down to valuation.

What every investor has to ask themselves is how much growth is worth paying up for. Palantir trades for nearly 100 times 2026 earnings estimates and 68 times 2027 earnings estimates.

PLTR PE Ratio (Forward) data by YCharts

That's a very expensive price tag to pay, and it bakes in multiple years' worth of rapid growth into the stock price. I have not invested in Palantir's stock for this reason: it appears too expensive to me. Each investor will have to make their own call, because for Palantir to fall to a more reasonable valuation of 30 times earnings, it would need to triple its earnings after 2026's growth is baked in.

That's a lot of optimism, and while Palantir may be able to do it, I'd rather invest in companies growing about as fast as Palantir but at more reasonable price tags. Can Palantir return to $207 per share before 2026 is over? I'm sure it's possible, but if it does, it will be based on very high expectations for 2027 and 2028.

Keithen Drury 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.