Think Palantir Stock Is Too Expensive? 1.28 Billion Reasons That Might Change Your Mind

Core Insights - Palantir Technologies has been awarded a significant contract from the Department of Defense, valued at $795 million, which expands upon a previous deal worth approximately $480 million, bringing the total to $1.28 billion [7][8] - Despite the uncertainty in the capital markets, Palantir's stock has surged by 77% in 2025, making it the top performer in both the Nasdaq-100 and S&P 500 [2] - The company's high price-to-sales (P/S) ratio exceeds 100, which is three times higher than its closest software peers, indicating a historically high valuation [13] Company Developments - Palantir's stock experienced a decline earlier in the year due to concerns over potential budget cuts from the Department of Defense, which could impact its government contracts [4] - Following initial fears, Defense Secretary Hegseth indicated a focus on the Software Acquisition Pathway, suggesting potential opportunities for Palantir to enhance its offerings within the military [6] - The recent contract win is seen as a strengthening of Palantir's relationship with the U.S. military, showcasing its ability to adapt and thrive amid budgetary changes [8] Valuation Analysis - The current P/S ratio of Palantir is significantly higher than historical averages, raising concerns about the sustainability of its valuation [13] - Investors are advised to consider a dollar-cost averaging strategy when investing in Palantir, given its high valuation and the potential for market volatility [15] - The recent Maven deal could serve as a catalyst for changing investor perceptions about Palantir's growth potential, but caution is advised before making investment decisions [15]