Palantir Posts Its Strongest Growth Rate Since 2020. Is The Stock Going Back To $200?

Palantir Technologies (NASDAQ: PLTR) has been an unstoppable business in recent years, thanks to the success of its artificial intelligence (AI) platform. The data analytics company has grown its business significantly in both the government and commercial sectors, expanding its customer base.

The company has been finding ways to accelerate its growth, even if it may have been affected by the economic downturn. Palantir’s business has been truly unstoppable, and it proved it once again when the growth rate reached 85% last quarter — the highest since going public in 2020. Is the stock a reckless buy given its impressive growth, and could it return to its near $200 highs?

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Palantir’s growth rate has been steadily increasing

When a company generates growth of 50% or more and revenues reach the billions, it becomes difficult for them to maintain that growth rate, especially as they go over the previous year’s numbers and face those comparisons. And yet, with Palantir, it has not only maintained a high growth rate, but improved upon it.

The company’s growth has been driven by AI, which is why it’s no surprise that the tech stock itself has done so well; as of 2023, it has increased by more than 2,000%. The problem becomes that with such significant price increases, it may be difficult for the stock to rise further, even amid strong quarterly results.

Why Palantir’s stock isn’t going up and why it isn’t going away

Generally, when a company posts such strong numbers, there is a subsequent increase in its share price. In Palantir’s case, its stock has been falling after the release of its latest quarterly results, which came out earlier this week. Not that the results aren’t impressive, but expectations are inflated given its valuation — it trades at more than 150 times earnings.

While the company’s outlook remains encouraging, and Palantir is hitting highs and lows, it may not have met past expectations enough to justify its extremely high valuation. That’s why, as Palantir’s business looks good right now, and as strong as its growth is, its stock may not be due for a rally.

Palantir’s business is pretty good, but given its incredibly high valuation, it might still be a good idea to pass on the stock, given the potential risk. This year, Palantir’s stock is already down 24%, and there’s plenty of room for it to drop even more. I wouldn’t count on it going back to $200 anytime soon.

Should you buy stock in Palantir Technologies right now?

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David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool has positions and recommends Palantir Technologies. The Motley Fool has a policy of disclosure.

Palantir Posts Its Strongest Growth Rate Since 2020. Is The Stock Going Back To $200? was first published by The Motley Fool