The AI revolution has made Palantir Technologies (Nasdaq: PLTR) one of Wall Street’s hottest stocks.
This data analytics pioneer, which helps organizations harness artificial intelligence through its Artificial Intelligence Platform (AIP), has seen its shares surge more than tenfold over the past two years as investors have bet big on its AI capabilities.
In 2025 alone, Palantir has already gained 48% – easily the biggest gain of any S&P 500 stock.
The company’s software helps enterprises and government agencies make sense of massive amounts of data, with its Gotham platform serving intelligence and defense customers while its Foundry platform caters to commercial clients.
But it’s the company’s latest offering, AIP, that has really captured investors’ imagination, as it helps organizations utilize and scale AI across their operations.
The bulls certainly have plenty to cheer about. Palantir just posted stellar fourth quarter results, with revenue jumping to $827.5 million (up 14% over the previous quarter and 36% year over year) and adjusted operating margins hitting a record 45%. Even more impressive was its U.S. commercial revenue, which soared 64% year over year as companies rushed to implement the company’s AI solutions.
Management’s confidence shows in their 2025 guidance – they’re projecting over 30% revenue growth to nearly $3.8 billion. They’re also forecasting U.S. commercial revenue growth of at least 54%. With adoption of AI accelerating and Palantir continuing to help organizations operationalize this technology, it’s easy to see why investors are excited.
But while the market’s enthusiasm may be sky-high, The Value Meter helps keep us grounded.
Looking at valuation, Palantir’s enterprise value-to-net asset value (EV/NAV) ratio sits at a whopping 46.65, nearly six times the average of 7.89 for companies with positive net assets. That’s an astronomical premium, even for a high-growth tech company.
The company’s cash generation also raises some concerns. While Palantir’s free cash flow has been positive for four straight quarters, it’s averaging just 6.48% of the company’s net assets – slightly below the peer average of 7.84%. In other words, despite the AI hype, it’s not actually generating cash more efficiently than its peers.
For all of Palantir’s impressive growth and market positioning, the current valuation appears to be pricing in years of flawless execution. CEO Alex Karp’s vision of Palantir becoming the cornerstone of America’s AI revolution may well come true, but that doesn’t necessarily make it a screaming buy.
The Value Meter rates Palantir as “Appropriately Valued.” But for investors who are captivated by the AI story, just remember that even the best companies can become overpriced when enthusiasm runs too hot.
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