Adam Spatacco, The Motley Fool

Sat, Jun 21, 2025, 10:00 AM6 min read

• Palantir is thriving in the world of enterprise software, and investors continue to cheer on the stock.

• While following the momentum can be tempting, Palantir's valuation is historically high and looks unsustainable.

• Rising demand for chips and AI infrastructure over the next five years bodes well for service providers such as CoreWeave.

• 10 stocks we like better than Palantir Technologies ›

Throughout 2025, technology stocks have been whipsawed by the latest news or rumors surrounding the economy, interest rates, and tariffs. One stock that has demonstrated a degree of immunity to these dynamics is data mining darling Palantir Technologies (NASDAQ: PLTR). With shares up 82% on the year, Palantir is the top-performing stock in the S&P 500 index so far this year.

While this level of momentum may cause trepidation among cautious investors, more bullish analysts, such as Dan Ives, see the rise of Palantir as an unstoppable force. In fact, Ives thinks Palantir is on its way to joining the trillion-dollar club before the end of the decade.

Personally, I am in a different camp. Right now, Palantir is trading at valuation multiples that are far higher than those investors witnessed in the late 1990s during the dot-com bubble. In short, I think a large-scale valuation normalization is in store for Palantir.

By contrast, emerging infrastructure services provider CoreWeave (NASDAQ: CRWV) looks well-positioned to dominate the next chapter of the artificial intelligence (AI) narrative.

Let's explore Palantir's rise and why I think the stock is due for a pullback. From there, I'll dig into CoreWeave's underlying business and explain how I think the company could eclipse Palantir's size over the next five years.

Palantir's breakout moment occurred in April 2023 when the company released a new product called the Artificial Intelligence Platform (AIP). Palantir markets AIP to both the private and public sectors -- with the U.S. Military being one of Palantir's key partners.

Unlike other data analytics platforms, AIP differentiates itself by helping large, complex businesses build ontologies. An ontology is a detailed visualization (i.e., a map) that illustrates various aspects of a business by breaking down revenue sources, cost structures, and other critical information in extreme detail. This process can help executive-level decision-makers model simulations using real-time data to assess the impact of different variables on the business.