Palantir Jumped Today -- Is the Red-Hot Artificial Intelligence (AI) Stock Still a Buy?
Palantir (NASDAQ: PLTR) stock posted another day of gains in Tuesday's trading. The software company's share price closed out the daily session up 4.6% and had been up as much as 4.9% earlier in trading.
Palantir's valuation continued to climb today following news that Republican Rep. Marjorie Taylor Greene had purchased new shares in the company recently. As a member of Congress, Greene is required to disclose her stock purchases and sales. Earlier this month, she purchased new Palantir stock worth between $1,000 and $15,000 and also purchased shares in other companies including Intel, Microsoft, and Meta Platforms.
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Palantir is on fire: Is the stock still a buy?
Palantir has been on an incredible run. The company's share price is now up 410% over the last year. On the heels of that incredible rally, the company's market capitalization has been pushed up to approximately $284 billion.
Palantir is now valued at approximately 225.5 times this year's expected earnings and 75 times expected sales. That's a risky, growth-dependent valuation even for a company with a leading position in artificial intelligence (AI) software. Some very strong growth is already priced into the stock at current levels, and it wouldn't be surprising to see the company's share price take a substantial hit in conjunction with even modest unfavorable news.
On the other hand, I think that long-term investors who buy Palantir stock at today's prices will likely still see strong returns. The business is posting fantastic profit margins and has proven to be highly scalable, and it still has a long runway for continued expansion.
With its category-leading product offerings for both private-sector and government customers, the company appears uniquely well positioned to benefit from the adoption and ongoing evolution of artificial intelligence. The company's strong presence in the defense industry should also give it some valuation protection in the face of rising geopolitical tensions. So while I think investors should build a position in Palantir through a dollar-cost-averaging strategy rather than all at once, I think shares are still worthwhile for long-term investors at current prices.
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Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Keith Noonan has positions in Intel. The Motley Fool has positions in and recommends Intel, Meta Platforms, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft, short February 2025 $27 calls on Intel, and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
