The Software Stock That Could Be 2026's Biggest Surprise

Core Insights - Palantir Technologies' stock remains highly valued at over 200 times the expected profits for 2025, leading to investor concerns about a potential bubble in AI stocks [1][6] - Despite recent stock performance, there is optimism that the AI revolution will continue to deliver, potentially boosting Palantir's stock price as market understanding of its business model improves [2] Financial Performance - Palantir's third-quarter revenue increased by 63% year over year to $1.18 billion, with total cost of revenue growing by only 42% and operating expenses by 25%, resulting in a tripling of operating income and more than doubling of net income [4] - Analysts predict revenue growth will accelerate, with profits expected to rise from an estimated $0.72 per share in 2025 to $2.21 per share by 2029 [5] Market Valuation Concerns - The company's stock is currently priced at 112 times trailing sales and 172 times projected profits for 2026, raising concerns about its high valuation and the potential for a market correction in AI stocks [8] - Investors are seeking clearer evidence of continued growth in Palantir's bottom line and profit margins to justify its speculative market cap [6][8]