Palantir Nearly Doubled Its Revenue. Its Stock Stood Still. Is It Time to Buy the Stock?

Shares of Palantir (NASDAQ:PLTR) trade around $176 as of this writing -- about where they sat a year ago.

A flat year is normally a forgettable one, but not for this company. Over those 12 months, the artificial intelligence data and analytics specialist nearly doubled its revenue, more than tripled its quarterly operating income, and raised its 2026 outlook twice.

The ride wasn't calm, to be sure. The stock fell as far as $106 at one point and climbed to nearly $208 at another. But the round trip ended close to where it began.

That combination made the stock far less expensive without the price ever falling. The amount investors pay for each dollar of Palantir's sales has been roughly cut in half.

Image source: Getty Images.

A year of doubling

In the second quarter, Palantir's revenue rose 93% year over year to about $1.94 billion, with U.S. commercial revenue growing even faster, up 149% to $764 million. Profits scaled right alongside the top line. Operating income more than tripled year over year, from $269 million to $912 million, lifting the company's operating margin from 27% to 47%. Earnings per share more than tripled as well, rising from $0.13 to $0.41.

Even more, the growth rate keeps climbing. Revenue grew 48% in the same quarter last year, and 85% in Q1 of this year -- the company's fastest rate ever at the time.

The second quarter's 93% topped it again.

"This quarter was otherworldly," said CEO Alex Karp in Palantir's second-quarter earnings release.

Management's targets have moved just as quickly. Palantir opened 2026 guiding toward about $7.2 billion of revenue, then raised the number twice: to about $7.65 billion in May, and to about $8.15 billion in early August.

For perspective, at this point last year, management was pointing toward about $4.15 billion of revenue for 2025. In a decade covering tech stocks, I can't recall another company this size nearly doubling its own annual revenue target inside a year.

The sales multiple did the falling

Through all of this, the market's total price for the company barely budged. Palantir's market capitalization sits near $420 billion, little changed from a year ago.

A year ago, that price amounted to about 100 times the revenue management was targeting for 2025. Today, set against this year's $8.15 billion goal, it works out to about 52 times guided sales.

The price is the same, but the business is about twice the size -- so the sales multiple was roughly cut in half.

In other words, the market didn't ignore Palantir's growth this past year. It absorbed it. Each strong quarter and each guidance raise went toward working down a valuation that was arguably among the most extreme in the market, rather than pushing the share price higher.

Did standing still make it cheap?

Cheaper, however, is not the same thing as cheap. Even the new, lower sales multiple is an extremely high price for any business.

The earnings side tells a similar story. Even measured against what analysts expect the company to earn next year, shares carry a forward price-to-earnings ratio of about 76.

To put the remaining distance in perspective, consider what it would take for the stock to trade at just 10 times sales, still a premium price in the software world. Palantir would need about $42 billion of annual revenue, more than five times this year's target. The current price seems to assume more years like the one Palantir just delivered.

Of course, the demand signals still point in the right direction. U.S. commercial remaining deal value (the total value of contracts customers have signed but Palantir hasn't yet turned into revenue) grew 124% year over year to about $6.2 billion.

But growth rates this high tend to get harder to sustain as the base gets bigger. And any meaningful deceleration could hit a stock priced at about 52 times guided sales especially hard.

Ultimately, Palantir is a far better business than it was a year ago, and the stock is meaningfully less expensive relative to that business. The past year showed the company can grow into a valuation that once looked impossible. But it hasn't grown all the way into this one yet.

So, is the stock finally a buy?

I don't think so, not at this price. If Palantir keeps compounding its underlying business at anything like this pace while the stock stands still again, I'd consider changing my mind.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.