Palantir's stock is up 220% in the past 12 months (through Nov. 10).
U.S. commercial business has been Palantir's fastest-growing segment in recent quarters.
Palantir's total revenue increased 77% year over year in the third quarter.
Few companies have garnered as much attention over the past year as Palantir Technologies (NASDAQ: PLTR). Although the company has been around since 2003, the recent artificial intelligence (AI) boom has attracted additional eyeballs to the company and its operations.
In the past 12 months (through Nov. 11), Palantir's stock is up 220%. This means if you had invested $1,500 then, your investment would be worth $4,800 today.
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Image source: Palantir.
Much of Palantir's stock success over the past year can be attributed to investors taking a liking to the company's growth in its U.S. commercial business. It has historically focused on U.S. government contracts, but its Artificial Intelligence Platform (AIP) has brought new life to its commercial business.
In the third quarter, Palantir's total revenue increased 77% year over year to $883 million. Its U.S. government segment accounted for the bulk of the revenue ($486 million), but its U.S. commercial business was its fastest-growing segment. Its revenue grew 121% year over year to $397 million.
Palantir's business growth over the past year has been impressive, but the stock comes with a lot of risk, given its valuation. At the time of this writing, it's trading at around 267 times its projected earnings over the next 12 months. There's expensive, and then there's that.
I recommend investors interested in Palantir to consider dollar-cost averaging their way into a stake to avoid investing in the company before a major pullback or correction (which isn't far-fetched at its current valuation).
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Stefon Walters 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.