Palantir priced at 81x sales, growth seen slowing to 50%

Palantir made its name by offering plug-and-play AI software that clients can deploy to mine internal data for insights, starting with government use before moving into the commercial marketplace. But the analysis notes that Anthropic and OpenAI now offer competing AI products, and that most of Palantir's platform capabilities can be recreated for far less than its subscription price.

The stock's valuation is the central tension. At 81 times sales, it trades far above the 20 or 30 times sales that generally marks software stocks as expensive. Wall Street's consensus points to decelerating growth, though the analysis acknowledges Wall Street has been consistently wrong on Palantir projections before, as growth kept accelerating even when the company itself projected a slowdown.

The analysis warns that companies reaching such high multiples have a poor track record of long-term share price performance, since so much anticipated growth is already priced in. Even if Palantir keeps growing rapidly, the stock could spend years absorbing that growth while trading sideways, or it could be disrupted by a growing AI lab, in which case the market could respond by selling it off.