I’ll be the first to admit it: I’ve been bearish on Palantir (PLTR) for a while.

In fact, a few months ago, when the stock was $35 a share, I actually told readers not to buy the stock…

*facepalm*

It’s continued to defy my expectations since.

The stock surged more than 20% yesterday following its Q4 earnings report, pushing the stock to a record high above $100/share.

My skepticism remains, however, and my concerns are rooted in valuation… not momentum.

Palantir – A Valuation That Defies Logic

The company delivered stronger-than-expected earnings and revenue, as well as upbeat guidance for 2025.

Revenue increased 36% year-over-year and adjusted earnings per share of $0.14 beat estimates of $0.11.

Palantir now trades at an eye-watering 550X trailing earnings.

While 36% is a solid clip of year-over-year growth, in my opinion no stock ever warrants a valuation multiple as high as 550X, let alone one only growing earnings by 36%...

Compare that to Nvidia (NVDA) – which is constantly labeled expensive and overvalued – that is expected to grow earnings by 130% this year and trades at a significantly lower 47x earnings multiple.

While Palantir’s results are undoubtedly strong, they don’t justify the extreme valuation the stock now commands.

AI Hype or Sustainable Growth?

The major driver of Palantir’s stock rally has been investor enthusiasm surrounding artificial intelligence.

The company’s AI-driven platforms have gained traction in both the commercial and government sectors, with U.S. commercial revenue growing 64% and U.S. government revenue up 45% year-over-year.

CEO Alex Karp emphasized that Palantir is “at the beginning of a revolution” and aims to be a cornerstone of AI in the U.S.

While the AI narrative is compelling, it doesn’t automatically translate into strong earnings and growth – two essentials for a fundamentally sound stock.

Palantir’s valuation is now so stretched that any negative catalyst – whether a slowdown in AI adoption, disappointing earnings, or broader market weakness – could send shares tumbling.

And at this sky-high valuation, PLTR stock has much more room to fall versus the average company.

Several Wall Street analysts have acknowledged this risk, with Morgan Stanley stating that valuation concerns are now the primary issue for the stock.

Even if the AI-driven revenue growth continues, it’s unlikely that Palantir’s current multiple is sustainable in the long run.

Conclusion: A Stock Priced for Perfection

I’ve been wrong about Palantir’s price trajectory these last few months. Very wrong.

Maybe wrong enough where I’m the least qualified person to speak on PLTR stock or business prospects.

But I do know valuation.

And I remain skeptical about its current valuation that leaves no margin for error.

If you’re chasing Palantir at these levels you should recognize the risks: any disappointment will lead to a sharp pullback.

I want you to know this before chasing the stock higher.

Of course, take what I say here with a grain of salt… I’ve been saying this since the stock was at $35.