This article first appeared on our US website.
After delivering incredible returns in 2023 and 2024, Palantir (NASDAQ:PLTR) stochas had another strong year. In 2025, the price is up 150% so far and is once again knocking on the door of record highs.
While investors may feel like they missed out on one of the biggest winners of the artificial intelligence (AI) investing trend, Palantir’s growth has been steadily rising and it has a lot more revenue to come, which could lead to a higher stock price.
We’ll get an update from Palantir on its third-quarter results on November 3, which could see shares rise again if the company announces growth that exceeds expectations. So, should you pick up shares ahead of this announcement?
Palantir’s platform is experiencing tremendous growth among both commercial and government customers
Palantir started as an AI data analytics program intended solely for government use. Those early contracts helped build and shape Palantir into the company it is today. Eventually, the company figured out that there was also a commercial application for its product line, so Palantir expanded to reach that audience as well. Both segments have contributed to strong growth at times, but each segment is growing rapidly, thanks to the massive AI expansion underway.
In the second quarter, Palantir’s commercial revenues rose 47% year over year to $451 million. Government revenues rose 49% year over year to $553 million. Palantir’s government division is therefore not only still the largest in terms of turnover, but also has a slightly faster growth rate. Combined, they delivered 48% growth to $1 billion, allowing Palantir to surpass $1 billion in quarterly revenue for the first time.
Unlike many growing software companies, Palantir placed an emphasis on becoming profitable. During the second quarter, Palantir’s profit margin was 33%, a level that most software companies strive for.
This is clearly the sign of a growing and dominant company, and it’s hard to fault Palantir’s results. Management has a strong track record of exceeding the expectations it has set forth, so another earnings increase on November 3 seems likely. An earnings beat could send the stock higher, making it a no-brainer buy today.
However, growth isn’t everything when it comes to investing, and there’s one big red flag that investors can’t ignore.
Palantir’s valuation is incredible
Even the best companies bought at the wrong price can turn out to be terrible investments. Palantir has an incredibly high valuation that few companies have ever achieved, especially considering Palantir’s relatively “slow” growth rate compared to companies that have reached these sky-high levels.
Palantir’s stock trades for 132 times revenue and 213 times 2026 earnings.
PLTR PS Ratio data according to YCharts
These valuation numbers are hard to believe, especially for a company with Palantir’s growth rates. Companies that achieve 100x or more revenue are rare, but when you do come across them, they typically double or triple their revenue year after year for several quarters.
While Palantir’s revenue growth is very strong, it is nowhere near the pace that some of its peers, which were trading at 100 times revenue or more, have achieved. This makes the stock incredibly risky because once growth shows signs of weakness, the stock price will fall. This hasn’t happened yet, so investors have continued to drive up the stock price of an incredible company that just disconnected from its stock.
If I’m a Palantir shareholder, I take some of the monster profits I’ve made and put that money into another investment. While Palantir will likely be a successful company and build out its AI platform for government and commercial customers, Palantir stock already has several years of growth priced into it. This concerns me, I think, and investors should stay away from it until after the third quarter results are announced; then we will see how the growth rate performs and make a new assessment.
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