Palantir Technologies' (PLTR -0.54%) stock price has jumped nearly 31% since Monday afternoon right after the release of its earnings report for the fourth quarter of 2023. With its artificial intelligence platform (AIP) and U.S. commercial segment showing massive growth, investor interest in the software stock has surged.

With the stock already up approximately 163% over the last year and its valuation rising, have investors missed their opportunity to buy?

Palantir and AIP

Admittedly, the potential of the company could motivate some investors to ignore its current elevated valuation. Palantir has stood out above other SaaS stocks by analyzing data and delivering insights. It has long relied on artificial intelligence (AI) and machine learning (ML) to make its determinations. After first focusing on national defense applications, it turned to the commercial sector to apply its knowledge to the business world.

With Palantir releasing AIP last year, more commercial customers have become interested in the software after attending Palantir boot camps. On the Q4 2023 earnings call, Chief Revenue Officer and Chief Legal Officer Ryan Taylor spoke of one attendee who said they could find at least "100 use cases" for AIP. Another attendee remarked about finding "endless solutions" through the product.

Such successes were likely the biggest reason Palantir's revenue in the U.S. commercial sector rose by 70% in Q4. U.S. commercial customer counts also moved higher by 55% over the same period.

Palantir's financials and valuation

Those aforementioned successes appeared to move the stock higher despite more muted financial results. The $2.2 billion in revenue reported for 2023 increased by 17% yearly, with Q4 revenue climbing by 20%.

Also, since operating expenses rose modestly, Palantir earned considerably higher profits. Its net income of $217 million in 2023 increased from a $371 million loss in 2022. The company also earned $97 million of that profit in Q4 alone, having increased quarterly net income by 152% compared with year-ago levels.

Nonetheless, considering that Q4 2022 was its first quarterly profit, investors should remember that profits usually rise by a considerable amount when a company first reaches profitability, rendering its P/E ratio of just above 360 meaningless. Looking to the future, a forward P/E of 73 is high but not unprecedented for an AI company in today's environment.

Also, its price-to-sales (P/S) ratio of 23 is up from single digits one year ago, and investors could turn on the stock should sentiment turn negative. Still, the P/S ratio is down from the 2021 bull market when it was routinely above 25 despite Palantir not being profitable at the time. That could indicate that investors are willing to tolerate a higher sales valuation for this company.

Moreover, AIP's success could help to increase revenue and earnings growth in future quarters. That, in turn, could help the P/S and P/E ratios fall quickly, which could propel the stock higher at a faster pace.

Is it too late to buy Palantir?

Given Palantir's current state, investors should feel safe adding shares at current levels. Indeed, valuations are high, which could give pause to some prospective buyers.

However, Palantir's customers appear to see game-changing potential in its software, which gives the company tremendous pricing power. Also, the rapid increase in customer counts and U.S. commercial revenue confirms the high demand for this software, and sales and earnings multiples will likely fall as customer counts increase.

Thus, it is likely not the end of the bull run for Palantir, and customers who buy the stock now can still earn considerable returns over the long term.