Palantir Technologies(US:PLTR) The Motley Fool·2026-01-28 01:16Core Viewpoint - Palantir Technologies is experiencing rapid growth, but its stock may be overvalued, leading to potential risks if growth slows down significantly [2][12]. Group 1: Company Performance - Palantir's fiscal third-quarter revenue grew by 63% year over year, an acceleration from 48% in fiscal Q2 [3]. - U.S. commercial revenue surged by 121% year over year in fiscal Q3, up from 93% in fiscal Q2, indicating successful diversification away from reliance on U.S. government contracts [5]. - The company generated nearly $1.2 billion in revenue during a quarter, showcasing its ability to maintain high growth rates off a large revenue base [10]. Group 2: Valuation Concerns - The stock is currently trading at a forward price-to-earnings ratio of 167, suggesting it is priced for continued strong revenue growth and significant margin expansion [12]. - For the stock to provide a decent return from its current valuation, Palantir's revenue would need to compound at an average rate of 30% and earnings at an even faster rate over the next five years [12]. - Investors are cautious as any signs of a material slowdown could lead to a significant drop in stock price [2][10]. Group 3: Industry Comparisons - Palantir's growth is being compared to that of Snowflake, which previously experienced rapid growth but has seen its growth rates decline significantly over time [7][8]. - Snowflake's product revenue grew 29% year over year in its third quarter of fiscal 2026, a stark contrast to its earlier triple-digit growth rates [7]. - The decline in Snowflake's growth led to a 24% drop in its stock over five years, while the S&P 500 rose by 81%, highlighting the risks associated with high-growth stocks [8].