Down 27% in 2026, Is Palantir Stock a Buy?

Core Viewpoint - Palantir's stock is considered overvalued despite strong revenue growth and profitability improvements, leading to a cautious investment stance [2][4][12] Financial Performance - Palantir reported a 70% year-over-year increase in revenue for the fourth quarter, with accelerating growth rates of 39%, 48%, 63%, and 70% across the four quarters of 2025 [2][5] - The company's net income rose over 250% year-over-year to $1.625 billion in 2025, indicating significant profitability improvements [6] Valuation Concerns - The stock's price-to-earnings ratio exceeds 200, suggesting that it is priced for continued strong growth, which may not be sustainable [7][10] - Palantir's market capitalization is over $306 billion, while trailing-12-month sales and net income are approximately $4.5 billion and $1.6 billion, respectively, highlighting a significant valuation gap [7][8] Growth Indicators - The forward price-to-earnings ratio is about 110, indicating that the stock remains expensive even based on analysts' consensus earnings-per-share forecasts [9] - The total contract value (TCV) growth rate has shown signs of deceleration, with Q4 closed TCV at $4.3 billion, up 138% year-over-year, down from 151% growth in Q3 [10][11] Overall Assessment - While Palantir's business is performing well, the current stock price may not justify the potential risks associated with future growth deceleration [12]