Think Palantir Stock Is Expensive? This 1 Chart Might Change Your Mind.

• Palantir Technologies banal has surged much than 2,000% since it launched its AI information mining solution.

• The banal looks extraordinarily costly erstwhile measured utilizing the astir communal valuation metrics.

• Palantir is posting accelerating gross and expanding free-cash-flow margins.

• 10 stocks we similar amended than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) has been 1 of the hottest stocks of 2025, gaining 134% twelvemonth to date. The institution is simply a pioneer successful creating artificial quality (AI) systems for governments and businesses, leveraging that expertise to make its Artificial Intelligence Platform (AIP). The resulting request has supercharged its results, sending its banal terms surging much than 2,000% since the merchandise of AIP successful April 2023.

At the aforesaid time, Palantir's marketplace headdress has jumped from $16 cardinal to $422 cardinal -- contempt plunging arsenic overmuch arsenic 25% past month. The banal inactive fetches a premium valuation, however, selling for 244 times this year's expected net and 96 times expected sales.

While important expectations are built into Palantir's banal price, different gauge helps supply important context.

Although it appears costly utilizing the price-to-earnings (P/E) ratio and price-to-sales (P/S) ratio, investors person been consenting to wage a premium for the stock. That's chiefly due to the fact that Palantir has been increasing by leaps and bounds.

In the 3rd quarter, gross jumped 63% twelvemonth implicit year, portion its net per stock (EPS) soared 200%. This marked the ninth consecutive 4th of accelerating gross growth, driven by its U.S. commercialized revenue, which jumped 121%. Palantir besides raised its outlook, guiding for gross maturation of at least 61%, though the institution has a past of outpacing its ain expectations.

As antecedently mentioned, accepted valuation metrics conflict erstwhile faced with a fast-growing company, and Palantir is nary exception. However, there's an aged concern adage worthy remembering successful this case: "Cash is king."

Palantir has go a cash-generating machine. Over the past year, the institution has delivered astir $3.9 cardinal successful revenue, turning $1.8 cardinal into escaped currency flow, resulting successful a free-cash-flow borderline of 47%. Put different way, Palantir is capable to crook each dollar of income into $0.47 successful escaped currency travel -- which is superb -- and that percent continues to climb.

The operation of surging request and increasing margins suggests Palantir isn't arsenic costly arsenic it looks.

Before you bargain banal successful Palantir Technologies, see this: