Is Palantir Stock a Buy Right Now?

Palantir (NASDAQ: PLTR) went public through a direct listing six years ago. It started trading at $10 per share, but it's now worth about $186 per share. Let's see why this tech stock delivered such massive gains -- and if it's still worth buying today in this choppy market.

Why did Palantir's stock soar?

Palantir operates two data-aggregating platforms: Gotham for government clients and Foundry for commercial clients. Both of these platforms create "digital twins" of a client's entire organization by gathering information through databases, supply chain reports, sensors, emails, internal documents, financial records, and even social media accounts.

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Palantir uses its Ontology data model to unify that fragmented data into an easy-to-query stream of information for non-technical users. Its clients can access that data to make better data-driven decisions, and it connects leading large language models (including OpenAI's ChatGPT and Anthropic's Claude) to its platform via its Artificial Intelligence Platform (AIP).

Palantir's silo-busting tools are becoming essential as the AI race drives more government organizations and companies to upgrade their data mining capabilities. That's why many U.S. government agencies already use Gotham to plan their projects and missions, and why large companies like Walmart use Foundry to streamline their businesses.

Unlike many other high-growth tech companies, Palantir turned firmly profitable in 2023. It was added to the S&P 500 (SNPINDEX: ^GSPC) and the Nasdaq-100 in 2024.

From 2025 to 2028, analysts expect Palantir's revenue and EPS to grow at CAGRs of 59% and 70%, respectively, as the AI market expands. Its stock isn't cheap at 87 times next year's earnings, but its explosive growth rates could justify that premium valuation.

Is Palantir's stock worth buying today?

Palantir expects global conflicts to fuel Gotham's growth through new government contracts, and the AI race to drive the expansion of its U.S. commercial business.

However, rising interest rates and Treasury yields could compress its valuation as more investors sell their higher-growth stocks to buy more conservative investments. Palantir's controversial reputation (due to its integration into immigration enforcement, mass surveillance, and military combat software) could also weigh down its stock.

Palantir doesn't face a single direct competitor that bundles together all of its data-aggregation services, but other growing companies -- including Snowflake and Databricks -- provide some overlapping services. These indirect competitors could be more compelling alternatives for companies that don't want to lock themselves into Palantir's services.

Palantir could still have plenty of room to grow, but I wouldn't touch it as long as interest rates are rising. If the macro environment improves, I'd take a second look at this high-growth stock.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies, Snowflake, and Walmart. The Motley Fool has a disclosure policy.