Palantir's Stock Valuation Still Looks Absurd. Here's Why Investors Keep Buying It Anyway.

By Adam Spatacco – Mar 23, 2026 at 4:13AM ESTKey PointsPalantir's market value of $368 billion makes it one of the most valuable software companies in the world.Palantir's valuation ratios look overextended relative to other SaaS stocks.A thorough understanding of Palantir's value proposition could make the stock appear attractively priced. When OpenAI publicly released ChatGPT on Nov. 30, 2022, shares of Palantir Technologies (PLTR 3.29%) were trading for $6. Today, the stock hovers around $150 -- a nearly 2,000% gain in just three years. With a market cap of $368 billion, Palantir is almost worth the combined value of legacy enterprise software stocks Salesforce and SAP. It's obvious by now that demand for artificial intelligence (AI) is the core tailwind fueling Palantir's parabolic rise. The question some are asking is whether Palantir's soaring valuation is sustainable. Below, I'll break down why smart investors continue to buy the stock hand over fist -- despite the appearance of an overvalued name benefiting from AI-driven tailwinds. Image source: Getty Images. Why does Palantir stock look so expensive? When I was an investment banking analyst, I spent countless hours putting together comparable company analyses. In layman's terms, this means that I benchmarked our client against a peer set of comparable businesses in the same industry to derive a valuation range. Broadly speaking, analysts will look at price-to-sales (P/S), price-to-earnings (P/E), or enterprise value-to-EBITDA multiples depending on the company and industry in question. As far as software stocks are concerned, the P/S ratio is a good metric to start with. Many SaaS businesses are not consistently profitable, and so measuring a cohort on a revenue basis levels the playing field. PLTR PS Ratio data by YCharts If you were to base an investment in Palantir purely off of the figures above, you'd come to the quick conclusion that Palantir stock is absurdly overvalued relative to other leading SaaS enterprises. While I understand that logic, it's flawed. A once-in-a-generation opportunity: Palantir is actually dirt cheap Smart investors understand that peer analysis has its shortcomings. While companies like Snowflake, ServiceNow, Databricks, and MongoDB each represent high-growth players in their respective software verticals, none are true, direct competitors to Palantir. This raises the question: Why did I include these companies in my analysis at all? Well, I more or less had to. You see, data analytics, database management, and cybersecurity are relatively commoditized businesses. While Palantir is often touted for its data-driven actionable insights, the company's Artificial Intelligence Platform (AIP) is far more complex. With its Foundry and Gotham suites, Palantir not only aggregates and synthesizes data, but allows decision-makers to simulate critical workflows in real time. To get a sense of how important Palantir's services are, consider the company is currently working alongside the U.S. military in the Iran war. Moreover, the company has a $10 billion contract with the Army as well as a total backlog that's growing over 100% annually across accelerating commercial and public sector adoption. ExpandNASDAQ: PLTRPalantir TechnologiesToday's Change(-3.29%) $-5.12Current Price$150.56Key Data PointsMarket Cap$360BDay's Range$149.09 - $156.6052wk Range$66.12 - $207.52Volume1.4MAvg Vol48MGross Margin82.37% Bulls might say that the software industry hasn't seen a company with Palantir's potential since Microsoft in the mid 1980s. Just as Microsoft built a near-monopoly in personal computing, Palantir could be on its way to achieving a similar scale of domination across enterprise software workflows. With annual revenue growth near 60%, consistent profitability, and its services spanning every major sector, I suspect Palantir has extremely low churn rates as its customers find AIP indispensable relative to other products in the market. For this reason, some investors view Palantir stock as dirt cheap. Hence, they continue to pound the buy button.Read NextMar 23, 2026 •By Manali Pradhan, CFA2 AI Stocks Wall Street Says to Sell Before They Drop 55%Mar 22, 2026 •By Patrick SandersPalantir Technologies Stock Has 1 Problem. Here's Why I'm Buying Anyway.Mar 22, 2026 •By Danny Vena, CPAThe Pentagon Just Dropped a Bombshell for Palantir Stock InvestorsMar 22, 2026 •By Geoffrey SeilerWhere Will Palantir Stock Be in 3 Years?Mar 21, 2026 •By Johnny RicePalantir Is Executing Perfectly.

History Says It Won't Be Enough.Mar 21, 2026 •By Geoffrey Seiler2 AI Stocks That Didn't Get the Memo That the Bull Market Hit a Speed BumpAbout the AuthorAdam Spatacco is a contributing Motley Fool technology analyst covering artificial intelligence, robotics, autonomous driving, e-commerce, and cybersecurity stocks. Previously, Adam was an investment banking analyst specializing in mergers and acquisitions, as well as debt and equity capital raises, for software companies. He later worked in corporate development at venture-backed technology start-ups. He holds a bachelor’s degree in business administration with a concentration in finance from the University of Richmond.TMFmoneyballX@moneyballinvestStocks MentionedPalantir TechnologiesNASDAQ: PLTR$150.56(-3.29%)-$5.12MicrosoftNASDAQ: MSFT$381.54(-1.92%)-$7.48SalesforceNYSE: CRM$195.10(+0.06%)+$0.11SAPNYSE: SAP$175.80(-4.98%)-$9.21ServiceNowNYSE: NOW$110.38(-2.55%)-$2.89MongoDBNASDAQ: MDB$261.16(-3.33%)-$9.00CrowdStrikeNASDAQ: CRWD$409.00(-4.48%)-$19.18DatadogNASDAQ: DDOG$125.08(-3.74%)-$4.86CloudflareNYSE: NET$215.20(-2.78%)-$6.16SnowflakeNYSE: SNOW$168.02(-4.21%)-$7.38*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.