Palantir Technologies (PLTR 1.02%) has been an unstoppable business in recent years, due to the success of its artificial intelligence (AI) platform. The data analytics company has grown its business drastically in both its government and commercial segments, expanding its customer base along the way.
The company has continually found ways to accelerate its growth, even when it might appear due for a slowdown. Palantir's business has been truly unstoppable, and it proved that again when its growth rate reached 85% last quarter -- the highest it's been since going public in 2020. Is the stock a no-brainer buy given its impressive growth, and could it get back to its highs of around $200?
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Palantir's growth rate has been consistently accelerating
When a company generates growth of 50% or higher and its revenue is in the billions, it becomes difficult for it to sustain that growth rate, especially as it laps prior-year numbers and faces those comparables. And yet, with Palantir, not only has it maintained a high growth rate, but it's improved upon it.
PLTR Revenue (Quarterly YoY Growth) data by YCharts
The company's growth has taken off due to AI, which is why it's little wonder that the tech stock itself has done so well; since 2023, it has risen by more than 2,000%. The problem becomes that with such a significant run-up in value, it may be difficult for the stock to rise even higher, even amid strong quarterly results.
Why Palantir's stock isn't soaring and why it might not take off
Normally, when a company posts such strong numbers, there's a surge in its share price afterward. In Palantir's case, its stock has actually been falling after the release of its latest quarterly results, which came out earlier this week. It's not that the results aren't impressive, but that expectations are inflated given its valuation -- it trades at over 150 times earnings.
NASDAQ: PLTR
Key Data Points
Although the company's outlook remains encouraging, and Palantir beat on the top and bottom lines, it may simply not have blown past expectations enough to justify its exceedingly high valuation. That's why, as good as Palantir's business looks to be right now, and as solid its growth is, its stock may not necessarily be due for a rally.
Palantir's business is excellent, but given its incredibly high valuation, it may still be a good idea to pass on the stock, given its potential downside risk. This year, Palantir's stock is already down 24%, and there's plenty of room for it to fall even lower. I wouldn't count on it getting back to $200 anytime soon.
