Is Palantir Stock a Buy for 2026?

Palantir (NASDAQ: PLTR) just closed the book on another successful year. Its stock rose 135% in 2025 -- an incredible year. But what makes this rise even more impressive is that it followed up two strong years of performance. In 2024, Palantir's stock rose 341% and in 2023 it was up 167%. That's three straight years of the stock at least doubling, which is a feat that few companies have ever accomplished. If you factor in Palantir's massive size, it's even more impressive.

After three strong years, is Palantir stock still a buy for 2026? Or will it take the year off?

Image source: Palantir.

Palantir's business is booming

Palantir is involved in the artificial intelligence (AI) trade and has become a leading company in the software application sector. This is a great place to be since some of the hardware plays may not be as great a long-term investment, as their revenues may drop once the AI computing footprint is built out. A software company like Palantir operates on an annual or monthly subscription, and the license must be renewed each period to maintain access to the software. This alone makes Palantir a worthy stock to consider, but the investment thesis grows even stronger when you look at its results.

Palantir's AI software was originally developed for government use. It created deep relationships in this industry, and government revenue still makes up the majority of Palantir's total. However, it also expanded onto the commercial side, where it has also seen huge success.

In Q3, Palantir's total revenue increased by 63% year over year to $1.18 billion. The growth pace places it among AI infrastructure companies like Nvidia, so it's no wonder Palantir has become a popular investment.

Digging deeper, both sides of Palantir's business are doing exceptionally well. Government revenue rose 55% year over year to $633 million, while commercial revenue increased at a 73% clip to $548 million. That growth is simply incredible, and Palantir looks to continue that momentum into 2026.

However, Wall Street analysts are skeptical about Palantir continuing this trend. They expect 54% revenue growth in Q4, while FY 2026 will be 43%. That's not a good sign for Palantir, as growth is the lifeblood of this stock. Still, Palantir has consistently outperformed expectations, and it may continue accelerating its growth in 2026, which won't be an easy task.

The problem is, Palantir's stock needs its growth to continue accelerating to justify its price tag.

Palantir is the most expensive stock on the market

While there are niche examples of stocks that are more expensive than Palantir or are affected by one-time events, I would argue that Palantir has the highest valuation in the market. Palantir's stock trades for 117 times trailing sales at 176 times forward earnings.

PLTR PS Ratio data by YCharts

Any stock that trades for over 100 times sales historically has doubled or tripled its revenue year over year. Palantir isn't anywhere close to that, so even if you factor in its strong growth rates, it's still very expensive.

The reality is that there are multiple years' worth of growth already baked into Palantir's stock. If we assign a 50 times earnings valuation multiple to the stock, and give it a long-term profit margin of 40% (what Palantir posted in Q3), it would take over four years at a 50% growth rate to reach that level if the stock price stayed flat from now until then.

That's greater than the growth rate that Wall Street projects for next year, let alone the three years after that. So, there is likely five or more years of growth already priced into the stock, which is far too great a premium to pay in my opinion. As a result, I think investors are better off staying away from Palantir. If the growth stays elevated, Palantir may keep climbing in 2026. But if it slows, the stock could get crushed.

Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.