Palantir Technologies (PLTR 6.22%) has used artificial intelligence (AI) for longer than nearly any other company. As a result, it already has a strong foothold in this space, making it a go-to company for anyone looking for a tailored AI program that helps make decisions.

Palantir had a strong 2023, up 167%, but faltered to start 2024. However, once its fourth-quarter earnings report came out, 2024 quickly turned around thanks to a 30% single-day rise.

This jump came from strong results and great guidance, making it seem like Palantir could be set for another strong year. But is it enough to make you a millionaire?

Palantir's AI products are in high demand

Palantir's AI software was originally designed for government use. It processed massive amounts of data and gave its users actionable insights to make well-informed decisions. This software was incredibly useful for military and intelligence applications but was also used in other areas like auditing.

While Palantir's government business is still strong (it made up 53% of Palantir's total in Q4), management decided to expand its use to commercial applications to increase its total addressable market. With the AI boom, commercial revenue has grown much faster than government revenue lately, as private businesses are much nimbler than government entities.

In Q4, commercial revenue rose 32% year over year to $284 million, compared to government revenue rising 11% to $324 million. The U.S. led the way on the commercial side, with U.S. commercial customer count rising 55% year over year and revenue increasing 70% to $131 million. Much of this growth came from Palantir's AIP (artificial intelligence platform) product. AIP allows companies to make an in-house generative AI product that keeps its internal data secure. This is critical, as many companies don't want to put their proprietary information into an unknown platform that may reveal information to competitors.

This was an incredibly strong quarter for Palantir, but management was even more bullish on 2024.

On its Q4 conference call, management stated that the demand for AIP is unlike anything it's ever seen, which drove its strong guidance for 2024. The company expects revenue of around $2.66 billion -- indicating growth of 19%.

Palantir is doing well, but does that mean the stock is a buy?

Palantir's stock is very expensive

Palantir is maximizing its profitability but hasn't achieved maximum margins. As a result, its price-to-sales (P/S) ratio (which values companies by how much revenue they generate) is a much better measuring stick. From this perspective, Palantir is quite expensive.

PLTR PS Ratio Chart

PLTR PS Ratio data by YCharts

A P/S of 23 is an expensive price tag for any company, let alone one growing at Palantir's pace. Usually, the price-to-sales ratio is expected to be lower than the year-over-year revenue growth rate. Palantir's is greater.

Another more common metric is the price-to-earnings ratio, which values businesses on their profits. This isn't a great metric for Palantir, as its margins haven't reached final levels, but if you use other software company margins, you can see where this might value Palantir.

Adobe is a great example of a fully mature software company with a profit margin of 28%. If Palantir had the same margin, it would be trading at 81 times earnings.

Several companies are trading for cheaper than that valuation with a similar growth rate, another reason Palantir seems like an expensive stock.

So, could Palantir stock make you a millionaire? Potentially. However, other stocks can provide the same upside for much less risk. Palantir will likely succeed as a company, but the stock's starting price may limit any upside unless Palantir's business results accelerate beyond stated guidance.