Shares of Palantir (PLTR 2.53%) spiked this week, finishing up 21.2% from last Friday's close. The jump comes as the S&P 500 gained 2.4% and the Nasdaq-100 rose 3.7%. Palantir reported huge earnings earlier this week, beating Wall Street's already high expectations for the artificial intelligence (AI) juggernaut.

Palantir brought in $1 billion

It was another massive quarter for the AI darling. Palantir's second-quarter earnings showed adjusted earnings per share (EPS) of $0.16 on $1 billion in sales versus the consensus $0.14 per share on $940 million in sales.

CEO Alex Karp said there is an ongoing "efficient revolution" that will allow him to increase sales while decreasing headcount, saying that his "goal is to get 10x revenue and have 3,600 people. We now have 4,100 [people]."

The company lifted its guidance for the full year from between $3.89 billion and $3.9 billion to between $4.14 billion and $4.15 billion.

A data center full of servers.

Image source: Getty Images

Why Palantir stock's valuation still looks risky

The company's incredible and efficient growth is undeniable, but I continue to have serious doubts about its long-term prospects. Its trailing price-to-earnings ratio (P/E) is more than 600, 10 times that of Nvidia and almost 30 times that of Alphabet. It even dwarfs Tesla, which has its own valuation issues.

The company would have to achieve near perfection for many years to justify this sort of multiple. I'm not sure it can, despite the optimism of its CEO. I would stay away from Palantir stock at this price.