The artificial intelligence (AI) landscape is rapidly evolving, and Palantir Technologies (PLTR) is successfully positioning itself at the forefront of this disruption. While generative AI platforms have dominated the narrative in the last two years, tech giants such as Microsoft (MSFT), Salesforce (CRM), and Alphabet (GOOG) (GOOGL) are racing to develop solutions for automated assistants, also known as AI agents. 

Palantir Technologies is also emerging as a frontrunner in the AI agents space, leveraging its established expertise in AI and machine learning. Its strategic positioning is supported by its leadership in AI/ML platforms, particularly in government and enterprise applications.

Palantir stock more than quadrupled in 2024, currently valuing the tech giant at a market capitalization of $236 billion. This growth is underpinned by Palantir’s presence in government contracts, especially with the U.S. military, where its data integration and decision-making technologies have gained traction.

Its focus on developing operational AI agents beyond traditional large language models sets Palantir apart. Unlike conventional LLMs, Palantir aims to create autonomous systems capable of enhancing human decision-making at scale. 

Palantir’s approach to operationalizing AI, combined with its infrastructure and expertise in critical applications, gives it a competitive advantage over tech giants and emerging startups. Palantir’s emphasis on advanced logic systems further strengthens its position in delivering sophisticated AI solutions that can automate complex tasks. This comprehensive approach to AI agent development positions the company to potentially lead the next wave of AI innovation.

Let’s see if PLTR stock remains a good buy right now. 

A Strong Performance in Q4 2024

Earlier this week, Palantir announced its Q4 results, which exceeded Wall Street estimates and drove the tech stock higher by 24% in a single trading session. It reported revenue of $828 million and adjusted earnings per share of $0.14, above estimates of $776 million and $0.11 per share, respectively. 

Palantir’s overall sales rose by 36% year-over-year, while U.S. commercial revenue grew by 64% to $214 million. U.S. government sales rose by 45% to $343 million. 

Palantir expects sales in 2025 to range between $3.74 billion and $3.76 billion, above consensus estimates of $3.52 billion. The company’s CEO, Alex Karp, attributed Palantir’s success to its central role in the AI revolution as it forecasts U.S. commercial sales to grow by at least 54% to $1.08 billion in 2025. 

Is PLTR Stock Overvalued?

Analysts tracking Palantir stock expect its revenue to increase from $2.86 billion in 2024 to $5 billion in 2026. Adjusted earnings are forecast to expand from $0.41 per share to $0.75 per share during this period, while free cash flow is estimated to grow from $1.14 billion to $1.9 billion. So, priced at 150x forward earnings and 95x forward FCF, PLTR stock is quite expensive and trades at a premium. 

Out of the 18 analysts tracking PLTR stock, two recommend “Strong Buy,” nine recommend “Hold,” two recommend “Moderate Hold,” and five recommend “Strong Sell.” The average target price for PLTR stock is $47.29, over 50% below the current trading price. 

Palantir’s market-thumping gains in the past year have made the tech stock among the most expensive globally. Its lofty multiples make PLTR stock extremely vulnerable if market sentiment turns bearish. Alternatively, investors are optimistic about the company’s widening AI capabilities in a rapidly expanding market.