Palantir Technologies Inc. (NYSE: PLTR) has seen its stock price skyrocket to unprecedented levels, closing last week at another all-time high. Since its 2021 market debut, shares have surged nearly 2,500%, with a gain of almost 150% so far in 2025. The rally has been driven by the company’s growing adoption of artificial intelligence, expanding ties with the US government, and a standout quarterly earnings report.
The meteoric rise has made Palantir the most expensive stock in the S&P 500 Index on a forward earnings basis — trading at roughly 245 times estimated earnings. For context, Nvidia Corp., another major AI beneficiary, trades at about 35 times forward earnings.
Valuation Pressures
According to Bloomberg Intelligence, Palantir would need to generate approximately $60 billion in revenue over the next year to align its valuation with peers based on enterprise value-to-sales ratios. This far exceeds Wall Street’s current forecasts of $4 billion in revenue for fiscal 2025 and $5.7 billion for 2026.
Gil Luria of DA Davidson described Palantir as “the best story in all of software,” but cautioned that to bring its forward price-to-earnings ratio down to the 30 range — comparable to Microsoft or AMD — the company would need to grow 50% annually for the next five years while maintaining 50% margins. Current analyst estimates expect earnings growth of 56% this year, before slowing to around 31% and 33% in the following two years.
Analyst and Investor Sentiment
Bloomberg data shows more analysts have a “sell” or “hold” rating on the stock than a “buy” rating, reflecting concerns about whether Palantir can sustain its momentum. However, some institutional investors remain committed, seeing the company as too significant to exclude from performance-focused portfolios.
Brent Bracelin of Piper Sandler recently raised his price target to $182 from $170, maintaining an “overweight” rating. He sees long-term growth potential supported by robust US defense spending — a market estimated at $1 trillion.
Risks and Comparisons
Historical parallels, such as Netflix trading at over 280 times forward earnings in 2015 before settling to about 40, suggest that extreme valuations can normalize if revenue growth continues. But others caution that Palantir’s high multiple could magnify downside risk if the company underperforms in future quarters.
Morningstar’s Mark Giarelli warns that “gravity” could pull the stock lower if expectations aren’t met, while Siebert Financial’s Mark Malek acknowledges the valuation risk but remains a buyer, citing scarce opportunities for consistent 30% growth rates in the current market.
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