Over the last three years, Palantir Technologies (PLTR 0.67%) has emerged as one of the most polarizing artificial intelligence (AI) stocks on Wall Street.
Skeptics often point to Palantir's soaring valuation, arguing that its stock price has raced beyond acceptable levels of fundamentals. Bulls, however, counter that the company's accelerating adoption across government and enterprise customers justifies further upside.
Just this week, equity research analyst Mariana Perez Mora of Bank of America raised her price target on Palantir to $215 -- implying 20% upside from current trading levels as of Sept. 25.
In this analysis, I'll break down Mora's argument and compare it to another recent eyebrow-raising call on Palantir. From there, I'll dig into Palantir's valuation profile and wrap up with a balanced take on whether Palantir stock is a buy right now.
Image source: Getty Images.
Why does Wall Street see Palantir as a top AI stock?
The steepening slopes of both revenue and profit growth are enough to capture investor attention when it comes to Palantir. Generating robust sales is one thing, but sustaining increasingly profitable unit economics places the data mining specialist in rare territory within the software-as-a-service (SaaS) industry.
PLTR Revenue (TTM) data by YCharts
Compelling financials are only part of the story, though. What truly excites Wall Street is where growth is coming from. Palantir's AI suite -- Foundry, Gotham, and Apollo -- has been the backbone of several headline-grabbing contracts this year:
- A deal with the U.S. Army worth up to $10 billion over the next decade
- A $795 million expansion of its Maven Smart System with the U.S. Military, bringing the total deal value to $1.3 billion
- Partnerships with NATO, including a $1.5 billion investment partnership with the United Kingdom
Deals of this magnitude provide Palantir with enviable revenue visibility and long-term cash flow durability, qualities that often command a premium valuation to begin with.
What makes Mora's price target increase stand out is her reasoning that, "if it works, it's not expensive." This remark may have been a subtle response to Salesforce CEO Marc Benioff, who recently criticized Palantir's software as being overly pricey.
In some ways, Mora's justification echoes that of Jim Cramer -- who recently argued that Palantir stock is cheap when measured on its Rule of 40 score.
Palantir's valuation: Breaking down growth expectations
For investors, the takeaway is that some analysts view Palantir's unique blend of financial momentum with accelerating contract wins as enough validation to support a historically elevated multiple.
The key observation from the chart below is that Palantir currently trades at a price-to-sales (P/S) ratio of 133 -- a level that towers above its peers in the SaaS sector. On the surface, this simply indicates that Palantir stock commands a premium multiple relative to comparable software businesses.
PLTR PS Ratio data by YCharts
Digging deeper, however, the narrative doesn't change much. Based on Wall Street's consensus revenue estimates over the next couple of years, I've calculated implied forward P/S multiples:
| Metric | 2026 Consensus Revenue Estimate | 2027 Consensus Revenue Estimate |
|---|---|---|
| Revenue | $5.6 billion | $7.6 billion |
| Implied forward P/S multiple | 76.8 | 56.6 |
Data Source: YCharts
Even if Palantir executes perfectly and meets its growth forecasts, its forward valuation still sits well above where its peers trade today.
Is Palantir stock a buy now, or is it priced to perfection?
Viewed through this valuation lens, Palantir's current market capitalization of roughly $430 billion looks stretched. For investors, this raises a critical question: How much of Palantir's future growth is realistically priced into the stock?
If you ask billionaire money manager Stanley Druckenmiller, the answer might be all of it. His fund, Duquesne Family Office, recently liquidated its entire position in Palantir -- likely a move to lock in gains as the stock continued its parabolic climb.
From my perspective, a prolonged pullback feels inevitable. No stock rallies in a straight line forever, and when Palantir eventually undergoes a valuation rerate, its share price could normalize well below today's levels -- with no guarantee of a quick rebound.
In my eyes, Palantir stock is priced to perfection. While momentum traders might be tempted to continue riding the wave higher and stomaching sharp volatility, long-term investors understand that there are more reasonable price points to build a position.
