Should You Buy Palantir Technologies Stock Before Feb. 3?

Palantir Technologies (PLTR) has been one of the standout stocks of 2024, experiencing a remarkable rise of 340%. An investment of $15,000 in this data analytics company at the beginning of the year would have surged to an impressive value of over $66,000 by year-end.

A significant factor behind Palantir's impressive stock performance is its robust revenue growth. The company's data analytics platform, which leverages artificial intelligence (AI), has opened up new opportunities for government and commercial clients, allowing them to streamline processes and improve decision-making.

Palantir's CEO, Alex Karp, is optimistic about future growth prospects, which has fueled investor enthusiasm for the stock. As the company prepares to announce its earnings on February 3, many are questioning whether they should invest in shares ahead of this event.

Will Palantir's revenue growth continue its upward trend?

Palantir's Artificial Intelligence Platform (AIP) has acted as a powerful catalyst for growth. Through engaging sessions known as boot camps, the company has demonstrated its platform's value to potential clients, resulting in a significant uptick in sales driven by high demand for AI solutions. In fact, Palantir has not only maintained its already elevated revenue growth but has also seen it accelerate in recent quarters.

During its last earnings call in November, Karp remarked on the "unrelenting" demand for their services and highlighted that the company "absolutely eviscerated this quarter," with revenue increasing by 30% year over year.

However, with Karp building expectations, investors should be cautious about what to anticipate from the upcoming results on February 3. Even if the company performs well, this alone may not lead to a significant rise in stock price.

Is the stock's slow start to 2025 a harbinger of future trends?

As of now, Palantir's shares have dropped slightly by more than 5% at the start of the new year. While this is not a dramatic decline, it could indicate that the initial excitement around the stock might be diminishing.

The primary concern surrounding Palantir is its high valuation. Although earnings have been improving, the stock trades at around 150 times the expected profits for the next year. Even considering long-term perspectives, Palantir's price/earnings-to-growth (PEG) ratio exceeds 3. A stock is generally considered to be a good buy if its PEG ratio is under 1, putting Palantir far outside that range.

For short-term investors, there's a real risk of the stock not experiencing a substantial rally, even if growth rates continue to climb. With such a high valuation, much of the anticipated growth is already factored into the stock price. Unless Palantir significantly surpasses earnings forecasts and gives an optimistic outlook for the rest of the year, the stock may still fall in value in the near term.

Why some investors might delay buying Palantir's stock

Considering its current valuation, Palantir's stock appears to carry more risk than potential reward. The upcoming earnings report could provide two important insights: whether the company's growth remains strong and whether the market's enthusiasm is starting to fade, indicating concerns over Palantir's high valuation. If the company does report strong results but the stock remains stagnant, it may suggest growing apprehension among investors about the stock's lofty price.

Given its excessive valuation, Palantir is one of the riskier stocks to consider for this year. While it remains an interesting company to monitor, there are likely better-priced growth stocks available for purchase today.

Palantir, Stocks, Investment