This Tech Company Is a Top AI Stock on Robinhood. I Still Can't Convince Myself to Buy It.

Popular stock trading app Robinhood keeps a list of the top stocks its users buy and sell, and it's probably no surprise that tech companies, and especially a handful of artificial intelligence (AI) companies, are among the top 10 on the list.

Amid some of the more established companies, like Apple and Tesla, there are also smaller companies that are making big waves in AI, including Palantir Technologies (NASDAQ: PLTR).

Palantir has rocketed over 1,600% over the past three years alone, but I still can't convince myself that I should own it. Here's why.

Image source: Getty Images.

Palantir caught the AI wave early

Palantir went public just five years ago and mostly focused on providing data analytics software for government agencies. One of its core offerings is the company's Gotham software, which helps the U.S. government and agencies with logistics and even battlefield decisions.

But over the past few years, the company has expanded its product line to include more commercial data analytics software. As of its Q4 2025, about 44% of its U.S. revenue comes from commercial sales, with the rest mostly coming from government contracts.

When ChatGPT debuted in 2022 and every tech company began pivoting toward AI, Palantir was essentially already there. The company already had a massive data analysis system in place that naturally fit into an AI-focused world. Companies and the government could pair their proprietary data with an AI large language model, making Palantir's products even more useful.

The result was that, in a few short years, the company has expanded its commercial customer count to 571, achieved full-year generally accepted accounting principles (GAAP) profitability just three years after becoming publicly traded, and benefited from an explosion of AI interest.

From 2022 to 2025, Palantir's sales rose from $1.9 billion to nearly $4.5 billion, and its net income jumped from a loss of $373 million in 2022 to $1.6 billion.

No wonder investors bought up the stock quickly.

The main issue that keeps me from buying Palantir

I believe there are some political reasons why some investors may not want to own Palantir stock, and I think those are legitimate, especially given that every investor gets to decide which companies they feel comfortable owning and which ones they don't.

And some investors may be adding additional momentum to the company's share price partially for political reasons as well. But I'm not here to dip into either side of the political argument.

I just think Palantir stock is too darn expensive.

This isn't a new hot take, but I think it's worth reminding potential investors who may have forgotten that Palantir's stock currently has a forward price-to-earnings ratio of 113.

Even by today's high-flying valuations thanks to AI stocks, that's expensive.

I understand that some companies are in a unique position to continue growing, and there are plenty of analysts who believe Palantir is one of them. A recent Morningstar article said Palantir is America's AI operating system, and "we don't see a clear competitor." Most analysts covering the stock have a buy rating on it with an average price target of about $186, indicating significant upside from its current share price of around $146 (as of this writing).

But I can't do it.

Maybe I'm being too conservative, but I think Palantir's high valuation, paired with the current volatility among many tech stocks, has me wondering where its stock is headed. Its shares are down 18% over the past six months, compared to the S&P 500's 6.5% gains.

The company's products are clearly in demand, and it has carved out a niche with them and has put its sales and earnings on a growth path. But investors have clearly priced in some of the company's biggest growth catalysts, and it could be difficult for Palantir to live up to the high expectations investors are placing on the stock.

Chris Neiger has positions in Apple. The Motley Fool has positions in and recommends Apple, Palantir Technologies, and Tesla. The Motley Fool has a disclosure policy.