Palantir’s stock has been one of the best-performing stocks in 2025, rising around 110% for the year. However, this rapid growth has led many investors to worry that they’ve missed the boat and that Palantir’s stock doesn’t have any more room to run.
Despite its impressive past performance, Palantir provides AI-powered data analysis software to a diverse range of clients, including government entities and commercial businesses. The company’s artificial intelligence platform (AIP) is driving growth by enabling users to integrate AI into workflows and automating manual processes.
In Q1, Palantir’s commercial customer count rose 46% year over year to 622, with the U.S. sector showing particular strength. This underscores the potential for future growth, as there are many companies that have not yet adopted Palantir’s products.
However, the company’s product is expensive, with an average annual cost of $2.36 million per customer. This limits the number of clients that can afford to use Palantir’s software. Despite this, the market is pricing in massive growth, valuing the stock at 125 times sales.
For context, most software companies trade between 10 and 20 times their sales, with the most expensive ones trading at 30 times sales. To reach a more reasonable valuation of 30 times sales, Palantir’s revenue would need to increase by over $8 billion, far exceeding its current growth rate.
Considering Palantir’s business is thriving and expected to continue growing rapidly, investors should be cautious about investing in the stock. The current valuation has priced in a much greater growth rate than what Palantir is currently delivering, which could lead to underperformance compared to the market over the next five years.
Source: https://www.fool.com/investing/2025/08/02/should-you-invest-10000-in-palantir-stock-right-no