Palantir Slipped Today -- Is the Artificial Intelligence (AI) Stock a Buy Right Now?

Key Points

• Palantir stock lost a small amount of ground amid pullbacks for the S&P 500 and Nasdaq Composite.

• Following today's modest retreat, Palantir's share price is down roughly 16% from its high.

• Palantir has been serving up fantastic business results, but its stock still comes with a high level of risk.

• 10 stocks we like better than Palantir Technologies ›

Palantir (NASDAQ: PLTR) stock saw another pullback in Monday's trading. The company's share price closed out the daily session down 1% but had been down as much as 5.9% shortly before 10 a.m. ET. The S&P 500 (SNPINDEX: ^GSPC) ended the day down 0.4%, and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was down 0.2%.

While there doesn't appear to have been any major business news behind Palantir's valuation contraction today, the broader market saw moderate selling pressures that seem to have impacted the stock. The stock is now down 10% over the last week of trading and 16% from its all-time high.

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Is Palantir stock a buy right now?

Palantir is one of the strongest overall players in the artificial intelligence (AI) software space, and it's been posting momentous sales and earnings growth. On the other hand, it's not as if the company hasn't already gotten a lot of valuation credit for its strong business growth and long-term expansion opportunities.

PLTR PE Ratio (Forward) data by YCharts

Trading at approximately 90 times this year's expected sales and 242 times expected non-GAAP (generally accepted accounting principles) adjusted earnings, Palantir has a valuation profile that stands out as being extraordinarily growth dependent even among the field of high-flying AI stocks. Despite the stock seeing a significant pullback from its all-time high, Palantir is still up 108% across 2025's trading and 1,840% over the last three years.

Recent sell-offs connected to macroeconomic risk factors and concerns about the current state of practical business applications for AI technologies are a reminder of the high level of risk that comes with investing in a company that already has a lot of explosive growth priced into its valuation. Along those lines, Palantir is probably still too richly valued to be a sensible investment for investors without very high levels of risk tolerance.

While I think the stock looks quite risky right now, I also think that it has a good chance of significantly outperforming the broader market over the next five years. In addition to very strong momentum with private-sector customers, Palantir's heavy exposure to the defense industry suggests that the stock comes with characteristics that help offset some of the risks associated with the biggest sources of potential geopolitical destabilization for the market.

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Keith Noonan 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.