Palantir Technologies (NASDAQ:PLTR) has the capacity to provoke strong opinions from investors. While it is difficult to argue with the incredible winning streak it has compiled, the company’s valuation multiples have also ventured far beyond those of its peers.
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On the one hand, the company’s fundamentals are certainly strong, and Palantir just seems to continue getting better with age. Its Q2 2025 earnings report reflected stellar revenue growth (north of $1 billion for the first time ever, representing a 48% year-over-year increase) and an increasing swath of clientele (up 43% year-over-year).
PLTR’s share price has shot up through the roof, swarming to gains north of 2,000% over the last three years. While this growth is certainly backed up by the company’s performance, the market’s exhilaration has arguably outpaced its muscular revenue gains.
That makes this investment decision an especially tricky one, explains top investor Keith Noonan.
“For investors with a long-time horizon and a high-risk tolerance, I think Palantir can be a long-term winner — but its risk profile suggests it’s likely to be too volatile for many potential buyers,” details the 5-star investor, who is among the top 3% of investors covered by TipRanks.
Noonan notes that yesterday’s interest rate cut sparked some losses for Palantir, as the 25-basis points was less than the 50 that some had been pining for. The investor further points out that PLTR’s Forward Price-to-Earnings multiple of 261x and its Forward Price-to-Sales multiple of 96x make it exposed to sentiment-based swings.
“The company trades at a valuation that sets the stage for big sell-offs if business momentum falls short of expectations or conditions emerge that drive sell-offs for the broader market,” adds Noonan.
Therefore, even with a “huge runway for growth,” Noonan urges investors to exercise caution when considering this AI stock. (To watch Noonan’s track record, click here)
Wall Street seems content to stick around for now, though they are also treading cautiously. With 13 Holds – to go along with 4 Buys and 2 Sells – PLTR carries a consensus Hold (i.e. Neutral) rating. Its 12-month average price target of $154.47 implies losses of ~8% for the year ahead. (See PLTR stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.