The Motley Fool·2026-01-16 02:00Core Viewpoint - Palantir Technologies' stock has significantly outpaced its business growth, raising concerns about a potential bubble that could burst in 2026 [3][7][13] Business Performance - Palantir's revenue for the third quarter was split between $633 million from government clients and $548 million from commercial clients, with government revenue growing at 55% and commercial revenue at 73% [6] - The company's trailing 12-month revenue has increased by 104% since the start of 2023, but this growth does not align with the stock's 2,700% increase [7][11] Valuation Concerns - Palantir's stock is currently valued at 117 times sales and 177 times forward earnings, which are considered extremely high valuations [8][10] - Analysts project a revenue growth rate of only 42% for Palantir in 2026, which is insufficient to justify its current stock valuation [11] Profit Margins - Palantir reported a profit margin of 40% in Q3, which is strong but limits the potential for further margin expansion [12] - The company is seen as optimized for profits, meaning it must rely on revenue growth to support its high valuation [12]