Palantir (PLTR -1.91%) stock recorded significant gains on Thursday, closing up 6.9% as the S&P 500 rose 2% and the Nasdaq Composite gained 2.7%. This follows substantial increases on Tuesday and Wednesday, bringing Palantir’s 2025 gains to 42.5%. The surge comes amid reports that the U.S. is prioritizing negotiations with major trade partners, despite Chinese officials indicating that meaningful trade deal discussions are not currently underway. Other reports suggest that the U.S. and India may have reached preliminary terms for a bilateral trade agreement.
Valuation Concerns
Traditional valuation metrics suggest Palantir stock may be overvalued at current prices, with a price-to-earnings ratio of approximately 194 and a price-to-sales ratio of 97. Investors with low risk tolerance may want to exercise caution at these levels.
Bull Case for Palantir
The bullish argument for Palantir centers on its strong long-term growth prospects in the artificial intelligence (AI) services sector and its strategic focus on software for operating-system-level AI integration. Recent wins have validated the company’s strategy and execution. If Palantir’s AI software leadership is indeed driving a paradigm shift in both public and private sector operations, there remain compelling reasons to be bullish on the stock.
Investment Considerations
Investors should be aware that Palantir’s current valuation profile comes with significant downside risk. While the company’s growth outlook is promising, conventional valuation approaches suggest caution. Risk-averse investors may want to steer clear of the stock at current levels. However, for those who believe in Palantir’s AI leadership and its potential to continue outperforming, there may still be opportunities to invest, albeit with a clear understanding of the associated risks.
