Is Palantir Stock Still a Buy? Wall Street Is Telegraphing a Clear Answer

Core Insights - Palantir Technologies has experienced significant stock price appreciation, rising from $6 to over $200, reflecting its success in the AI sector [1][2] - Despite impressive earnings reports, the stock has seen a sell-off following its third-quarter earnings announcement, raising questions about its future performance [2][8] Financial Performance - Palantir's third-quarter revenue grew 63% year-over-year and 18% quarter-over-quarter, driven by the launch of its AIP platform [4] - The company reported third-quarter revenue of $1.18 billion, exceeding estimates of $1.09 billion, and non-GAAP earnings per share of $0.21, surpassing expectations of $0.17 [6] - Fourth-quarter revenue guidance is set at $1.33 billion, above estimates of $1.19 billion, while full-year 2025 revenue guidance is $4.40 billion, exceeding estimates of $4.17 billion [6] Market Dynamics - Palantir's remaining deal value among U.S. commercial clients surged by 199% year-over-year to $3.63 billion, indicating strong growth in its commercial business [5] - The stock has increased over 300% in the past year and over 2,200% in the past three years, but its valuation has outpaced its actual growth [9][10] - Palantir's current market cap stands at $424 billion, with a gross margin of 80.81% [9] Valuation Concerns - The stock is considered one of the most expensive in the market, with a price-to-sales (P/S) and price-to-earnings (P/E) ratio significantly higher than the S&P 500, which trades at around 28 times earnings [10][12] - For Palantir's valuation to align with typical market levels, its bottom line would need to double annually for four to five years, which raises concerns about sustainability [12] Investor Sentiment - Wall Street's reaction suggests that high expectations may be difficult to meet, leading to a decline in stock price despite strong quarterly performance [13][14] - The current market sentiment indicates caution, advising against impulsive buying in light of the stock's high valuation [14]