Should You Buy Palantir Stock After Its 370% Gain in 2024? Wall Street Has a Clear Answer for Investors

Core Viewpoint - Palantir Technologies has seen a significant stock increase of 370% this year, driven by strong financial results and inclusion in major indices, but is viewed as overvalued by Wall Street analysts [1][2]. Financial Performance - Palantir's revenue grew by 30% to $726 million in the third quarter, with a 39% increase in customer count and an 18% rise in average spending per existing customer [8]. - Non-GAAP earnings increased by 42% to $0.10 per diluted share [8]. - The company has secured a $37 million contract with the U.S. Special Operations Command and received FedRAMP High Authorization, which may lead to more government contracts [9]. Market Position and Product Offering - Palantir is recognized as a leader in artificial intelligence software, with its AIP platform receiving high scores from Forrester Research compared to competitors like Microsoft and Alphabet [7]. - The company's ontology-centric architecture differentiates its platforms, allowing clients to integrate data and machine learning models effectively [5][6]. Valuation Concerns - Palantir's stock trades at a price-to-earnings ratio of 230, which is considered excessively high compared to other software companies, with a PEG ratio of 7.4 indicating overvaluation [10][12]. - Despite expected earnings growth of 31% over the next 12 months, the current valuation raises concerns about potential downside risk for investors [10][12]. Industry Outlook - AI platform spending is projected to grow at an annual rate of 51% through 2028, suggesting a favorable market environment for Palantir [11]. - The CEO emphasized the strong demand for AI solutions, indicating a robust growth trajectory for the company [13].