Palantir Technologies (PLTR +4.79%) has been one of the biggest winners since the artificial intelligence (AI) boom began in early 2023.
The company's custom AI software has been a game changer for its government and commercial customers, and the business results have been stunningly strong since Palantir launched its AIP platform in mid-2023.
As a result, the stock has surged by more than 1,600% over the past three years. Recently, the market has cooled off, and Palantir stock has fallen nearly 25% from its high. Should investors buy the stock right now?
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It's clear that Palantir's business momentum isn't something you see often
At its core, Palantir's software analyzes data. The beauty of that is almost any application that creates data is a potential use case. Palantir's software has aided military missions, uncovered financial fraud, optimized hospital scheduling, and improved manufacturing supply chains, among many other things.
Palantir grew by a blistering 70% year over year in the fourth quarter of 2025, putting full-year sales at nearly $4.5 billion. That's 10 consecutive quarters of accelerating growth, and management set another high bar for 2026, guiding for $7.19 billion in sales. That's 61% growth, and who knows, perhaps Palantir outperforms that.
The most limiting factor of Palantir's growth is that it's probably too expensive for most small businesses. Still, there is a high ceiling. There are 20,000 large corporations in the United States alone, and the U.S. government remains the company's largest client. As of now, Palantir still only has 954 total customers.
NASDAQ: PLTR
Key Data Points
Why Palantir's recent decline could be just getting started
Despite the stock soaring on its earnings release, the stock is actually down 25% from its high. As impressive as Palantir's performance has been, the stock's remarkable ascent has pushed its valuation to extreme levels.
Even now, Palantir stock still trades at 47 times its 2026 revenue guidance, one of the most expensive valuations that you'll see on Wall Street. Palantir's recent decline could suddenly get much worse at the first sign of slowing growth or other negative news.
Palantir has become an example of how important it is to separate a company's business from its stock. Sure, the business is rocking out, and Palantir looks poised to be one of the world's most prominent AI stocks over the next decade. Unfortunately, the stock price already reflects that.
Investors would probably be wise to continue avoiding Palantir stock until the valuation comes far down from its current level.
