Key Points
Palantir's impressive growth rate has made it a captivating investment to own.
It has tremendous opportunities as a result of artificial intelligence, and that has enabled its growth to accelerate.
Even with its recent decline, however, investors are paying a massive premium for the stock today.
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It's been a volatile year for Palantir Technologies (NASDAQ: PLTR). The data analytics stock has been sliding in the first couple of months of 2026 as its valuation has appeared to weigh down the stock, as many investors have been thinking twice about whether it is worth its hefty price tag.
On Monday, the stock was rallying again and inching closer to the $150 mark. Last year, it reached highs of more than $200, before eventually falling. Is it a no-brainer buy while it's below $150?
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Palantir has been a growth beast
Palantir has strong relationships with the U.S. government, has been leveraging artificial intelligence (AI) to make its data analytics platform more efficient and effective, and as a result, its growth rate has been spectacular. For many growth investors, it's been the go-to AI stock to own in recent years.
PLTR Revenue (Quarterly YoY Growth) data by YCharts
With growth like this, it's little wonder why investors have been buying up the stock in droves. Not only has Palantir been generating phenomenal growth numbers, but its already impressive growth rate has been accelerating, which is no easy task. This is even as the economy arguably isn't in great shape, with many businesses struggling. Palantir has set itself apart from the pack, making it a compelling option for all types of investors.
The stock is cheaper, but it's still incredibly expensive
Palantir's stock has been off to a tough start to 2026, and while it's certainly cheaper than it was just a couple of months ago, that doesn't mean it's a bargain by any stretch. Currently, it's trading at around 230 times its trailing earnings, which is an obscenely high valuation. In the past, however, it hasn't been uncommon to see Palantir's stock trade at more than 400 or even 600 times its earnings.
The multiple has been coming down, but it's still high and should give investors reason to think twice about the stock. Investing in Palantir's stock at such a high premium effectively prices it for perfection, and any hint of a slowdown in its growth could trigger a sell-off.
This is a business that has generated $4.5 billion in sales over the past year, and yet, its market cap is around $350 billion. Although it may seem like you're getting Palantir's stock at a discount because it's been declining this year, its price would have to come down significantly more for it to look like a deal. This is an extremely expensive stock to own, which will leave you with virtually no margin of safety.
Should you buy stock in Palantir Technologies right now?
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David Jagielski, CPA 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.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
