If you have been following the artificial intelligence (AI) revolution over the past two years, chances are you're familiar with a software company called Palantir Technologies (PLTR 1.65%). Since last January, shares of Palantir have risen some 550%. Just in 2025 alone, they have already gained 49% as of Wednesday's closing prices.
While the stock price hovers around all-time highs, there's at least one prominent financial figure who hasn't quite bought into the bull narrative. I'm talking about Aswath Damodaran, a finance professor at New York University (NYU). Among financial media circles, Damodaran is referred to as the "Dean of Valuation."
Below, I'll report what Damodaran recently said about Palantir. More importantly, I'll use his comments to help assess the full picture surrounding the company and whether the stock is a good buy right now.
NASDAQ: PLTR
Key Data Points
What did Aswath Damodaran just say about Palantir?
Last week, Damodaran sat down for a podcast interview with Scott Galloway, who is also a professor at NYU's Stern School of Business. During the segment, the Dean of Valuation was peppered with questions around Palantir -- in particular, whether or not he thinks the stock is overvalued.
Damodaran didn't mince his words, saying that Palantir is the one company he refrains from valuing because he has "no idea what they actually do" -- or at least, not a sufficient idea, perhaps given the proprietary or classified nature of the company's work.
A comment like that could be seen as humorous on some level. However, Damodaran's words are quite important. Below, I'll explore why his bluntness and honesty can serve as a valuable investment lesson.
Image source: Getty Images.
Looking at Palantir's business
I'll admit right off the bat that Palantir has a lot going for it. The company's revenue and profits are soaring, and it's forming alliances with AI's most important players -- including Amazon, Meta Platforms, Microsoft, and Oracle.
Moreover, the company has identified some pretty savvy ways to unlock accelerated growth in its historically lumpy federal sector business, primarily through partnerships with other defense contractors. The relationships listed above have jump-started Palantir's previously mundane growth and are helping to put the company at center-stage in AI enterprise software.
Its AI software is used for data analysis across a host of purposes, including military operations, supply chain logistics, fighting financial fraud, energy, healthcare retail operations, and more. At least on some levels, you could say the same about other software platforms.
Is Palantir stock a good buy right now?
A good way to assess Palantir's valuation could be to compare the stock to its peers. As the chart below illustrates, the company's price-to-sales (P/S) multiple of 96 is considerably higher than other leading enterprise software platforms. And the ratio is expanding, indicating that investors are buying up the stock on the heels of higher momentum.
PLTR PS Ratio data by YCharts
At the moment, Palantir is an exciting chapter in the broader AI story. But at least for some observers like Damodaran, it's not possible to accurately value this storyline -- and to what degree there may (or may not) be hype surrounding it. It can be tempting to see a rising share price and decide to follow the momentum in hopes that it goes even higher. But that doesn't necessarily make you a fundamental investor, per se.
It's a bit more like the greater fool theory, which posits the notion of chasing a soaring valuation in hopes that someone else will buy your goods (or stock) at an even higher price point.
This is why Damodaran's point is a valuable one. If you don't understand the granular details of a business, then investing in that company may be a shortsighted idea. Being a seasoned investor requires heavy levels of due diligence, and if a company's business model is beyond your scope or expertise, there's nothing wrong with looking for opportunity elsewhere.
