Palantir (NASDAQ:PLTR) shares are off to a hot start to the year, now up close to 35% year to date. It’s only been January and a few days of February, and PLTR has already delivered gains that your average would be hard-pressed to achieve for the full year, even if the AI boom continues running strong through 2025. With the latest share surge exceeding 20% in a single day after earnings, questions linger as to whether the firm, with a nearly quarter-trillion-dollar market cap, can be the next big thing in AI if it isn’t already.

Palantir stock is getting unfathomably expensive, at least when you look at traditional valuation metrics.

While there’s no doubting how unbelievably good that last quarter was, the nosebleed-level valuation is enough to make any value investor steer far away from the name.

At the time of writing, PLTR stock goes for 86.7 times price-to-sales (P/S)—that’s price-to-sales, not price-to-earnings (P/E), which goes for over 181 times on a forward-looking basis. Indeed, many growth and earnings surprises will probably be needed to support that kind of excessive valuation.

Palantir did not disappoint for the latest quarter, delivering a strong beat across the board, with applause-worthy triple-digit growth coming out of U.S. commercial bookings. Additionally, the AI Platform (AIP) continued to impress, with “unprecedented demand” from commercial customers.

While a vast majority of Wall Street analysts were less-than-bullish on the name, many of whom had PLTR stock as a “Hold” (or equal-weight) going into Palantir’s blockbuster earnings results, with a handful of rare “Sell” (or underweight) ratings, it’s Palantir CEO Alex Karp gets the last laugh.

Perhaps Karp put it best when he described his firm’s organic growth as “untamed.”

This lone bull who got Palantir right ahead of earnings.

Given the lack of bulls in the analyst community, I think it’s time to give a shout-out to Wedbush Securities’ Dan Ives, a man who not only stayed bullish on PLTR as other analysts around him downgraded the name to “Hold” but pounded the table in aggressive fashion.

Indeed, it’s hard to pound the table harder than to refer to a firm as the “Messi of AI.” For those unfamiliar, Ives is comparing Palantir to soccer legend Lionel Messi, known by many as the greatest player ever to lace up the soccer cleats. In any case, Ives was spot-on to go against the crowd and to stay bullish on shares of Palantir despite the seemingly elevated valuation metrics.

In my previous piece, dated mid-January, I acknowledged that Mr. Ives’ comments caused me to change my tune on Palantir despite the uncomfortably heavy valuation metrics. At the time, PLTR stock was trading for closer to 60 times P/S. Still, I couldn’t help but compare Palantir to a slightly younger version of Nvidia (NASDAQ:NVDA), which also experienced unprecedented AI-induced demand for its offering.

“Is the bar set high for Palantir in 2025? Most definitely. But of all the AI software innovators, the firm seems best able to grow into its obscenely high price tag.” I wrote just a few weeks ago.

Looking back, it was hard to go against the recommendation of most Wall Street analysts. However, the momentum riding behind AIP seemed almost unstoppable.

Add the DeepSeek R1 breakthrough into the equation, and I think the Palantir growth thesis has never looked better. Notably, Karp called for the commoditization of AI models for years now. And he’s positioned to benefit from the ensuing pick-up in demand that comes from the falling price of AI compute. 

The bottom line

Palantir stock has gotten absurdly expensive, but shares could probably stay expensive as it makes the most of the AI run. If you want the best seat in the house, sometimes you’ve got to pay for it. The big question investors must answer is whether the price is too high.

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