Palantir Technologies (PLTR 1.30%) has been one of the hottest stocks for each of the past two years. After more than quadrupling in price in 2024, the stock is up more than 147% this year.
The question on many investors' minds is, can the stock keep the momentum going in 2026? Let's take a closer look to see if investors should be buying the stock before year-end.
An AI winner
Palantir started as a data-gathering and analytics company primarily serving the U.S. government. It was born out of the idea that the pattern recognition technology used by PayPal to detect fraud could be applied to help fight terrorism. Its technology would gather data from disparate government databases and then identify complex patterns. The U.S. government remains the company's largest client today, and it's become a central player in helping modernize the government, especially its military and intelligence arms.
Image source: Getty Images.
However, it has been the company's push into the commercial sector with its artificial intelligence (AI) platform that has taken its growth to new heights. Instead of chasing to build the next greatest large language model (LLM), Palantir decided to focus on the workflow and application software levels to make AI more useful to organizations. It did this by developing a platform that would gather an organization's data from a variety of places and then organize it into an ontology that it would then link to real-world processes and assets.
By having a clean, structured set of data, Palantir's Artificial Intelligence Platform (AIP) significantly reduces AI hallucinations, which organizations cannot afford when dealing with mission-critical tasks. This, in essence, has helped AIP become almost like an AI operating system. While its customers can choose to use whichever AI model they want, AIP helps bring the best out of it.
AIP has become a critical part of the AI landscape, helping make it more useful in real-world applications. The platform is being used by organizations across a wide variety of industries to solve very different problems. This can be anything from helping pipeline companies optimize their maintenance schedules to helping hospitals monitor for sepsis to helping insurance companies with their underwriting.
With the launch of AIP in 2023, Palantir has seen its revenue growth accelerate for each quarter over the past two years. It's gone from just 13% revenue growth in Q2 2023 to 63% revenue growth last quarter. The growth is being led by U.S. commercial customers, with revenue in this segment soaring 121% year over year in Q3. Palantir is attracting new customers and seeing existing customers rapidly expand. Last quarter, its customer count rose by 45% year over year, while its net revenue retention was 134% over the past 12 months. For net revenue retention, any number over 100% indicates growth, but notably, this is only for customers that have been clients for at least a year. New customers have also been expanding quickly.
NASDAQ: PLTR
Key Data Points
Is Palantir stock a buy?
Palantir has been firing on all cylinders, but the stock's valuation is incredibly high. The stock trades at a price-to-sales (P/S) multiple of nearly 70 times 2026 analyst estimates. Note that this is a revenue multiple, not an earnings multiple. On a forward price-to-earnings (P/E) basis, it trades at a multiple of 183.
Given its lofty valuation and huge share-price run over the past two years, I would not be buying Palantir stock at these levels. That said, I think the company does have the potential to become one of the largest and most important AI companies in the world. However, that doesn't mean the path is straight up from here.
Most of the largest companies by market cap today have seen their share prices cut in half at some point, before eventually bouncing back. As such, I'd prefer to keep Palantir's stock on the radar and be a buyer if the stock ever does see a big pullback.
