Palantir (PLTR 4.14%) investors have had quite a ride this year, with the stock surging 114% in 2025 as of market close Sept. 9. The company sits at the center of the artificial intelligence (AI) boom and stands out as one of the few companies applying the technology in the real world and consistently turning a profit.
Palantir's AI-fueled products are used by defense and civilian departments across the federal government, as well as a diverse set of enterprise customers, showing just how flexible and broadly useful its products are. The company's top and bottom lines reflect this, with both growing at a lightning pace. Its stock has followed suit.
Know what we know now, this would have been an excellent investment five years ago when the company IPO'd. Its stock price has risen roughly 1,600% since. If you had invested just $500 in September 2020, you would have roughly $8,500 today. You can see the incredible pace of growth in the chart below.
As strong as Palantir's run has been, I think investors are getting ahead of themselves. There's no question the company is executing well and creating real value, but by any objective measure, the stock is overpriced. It's trading at nearly 115 times sales -- an eye-popping figure that makes it almost seven times more expensive than OpenAI would be if it were public at its latest $500 billion valuation.
Image source: Getty Images
Yes, Palantir is profitable while OpenAI is not, and that matters. But if you look at earnings, the picture is just as extreme. The stock trades at roughly 510 times earnings, a number that simply isn't sustainable. At today's price, I can't recommend the stock. Eventually, it should come down to a more rational level, and I believe that will be far lower than where it trades now.
