Sneha Nahata

Wed, Jun 25, 2025, 7:41 AM4 min read

Palantir Technologies (PLTR) has been the top-performing S&P 500 Index ($SPX) stock over the past year. Shares of this AI software company have risen over 92% year-to-date. Moreover, shares have gained 490% in the past year. Palantir’s perceived leadership in artificial intelligence (AI) and machine learning (ML) platforms, its accelerating financial performance led by momentum in its commercial business, significant strategic contracts with the U.S. government, and focus on product innovation have led to a rally in PLTR stock.

Plus, Palantir’s remarkable stock surge has occurred even as the company continues to hold an excessively high valuation.

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The market’s willingness to overlook Palantir’s premium valuation is rooted in its strategic positioning within the burgeoning AI landscape. Investors remain confident in Palantir’s ability to turn advanced AI capabilities into real-world solutions for businesses and government clients. In short, this suggests that the market is heavily influenced by momentum in PLTR stock, driven by the compelling narrative surrounding AI.

Given the momentum, Palantir stock could still witness short-term gains. However, the substantial disconnect between PLTR’s current pricing and valuation introduces considerable risk.

Palantir's current valuation is strikingly high, far exceeding not only the broader industry averages, but also those of much larger, more established tech companies with substantially greater revenue streams.

To put this in perspective, Palantir’s price-sales (P/S) ratio has surged to an astonishing 115.23x. In contrast, peers in the AI and software space — such as Snowflake (SNOW), UiPath (PATH), and C3.ai (AI) — are trading at much lower forward P/S multiples of 19.68x, 4.6x, and 7.99x, respectively.

Even the biggest names in the tech space appear far more reasonably priced compared to Palantir. Alphabet (GOOGL), for example, trades at a P/S ratio of just 5.73x. Microsoft (MSFT) comes in at 14.74x, and even Nvidia (NVDA), with its dominant role in AI hardware, has a P/S of 26.96x — still a fraction of Palantir’s.