Is Palantir a Buy, Sell, or Hold in 2026?

Core Viewpoint - Palantir Technologies has faced a significant sell-off in the SaaS sector, with its stock down approximately 20% year-to-date, raising questions about its future investment potential [1]. Group 1: Company Performance - Palantir has integrated itself into the AI landscape, enhancing large language models (LLMs) for business applications, acting as an AI orchestration layer that organizes data and reduces AI hallucinations [2][3]. - The company has experienced 10 consecutive quarters of revenue growth acceleration, with last quarter's revenue increasing by 70% and U.S. commercial revenue soaring by 137% [3]. Group 2: Valuation Concerns - Despite its growth, Palantir's stock is considered expensive, trading at a forward price-to-sales (P/S) ratio of 45 times 2026 estimates and a forward price-to-earnings (P/E) multiple exceeding 100 times [4]. - The company is heavily reliant on the U.S. government, which constitutes over one-third of its revenue, making it vulnerable to changes in government priorities and funding [5]. Group 3: Competitive Risks - Palantir is not an AI-native company, which poses a risk of being outperformed by competitors that are built specifically for AI solutions [6]. - If growth slows, Palantir's high valuation multiples could lead to a significant decline in stock value [6]. Group 4: Long-term Outlook - There is potential for Palantir to become one of the largest companies globally, similar to other tech giants that have faced significant market fluctuations [8]. - Current valuation suggests that buying the stock may be more favorable below $110, where it would trade at around 25 times 2027 revenue estimates [9].