Palantir Is Executing Perfectly. History Says It Won't Be Enough.

By Johnny Rice – Mar 21, 2026 at 3:30PM ESTKey PointsPalantir trades at 87 times sales -- the most expensive stock in the S&P 500 today, and among the priciest in the index's history.Of the 231 S&P 500 companies that have ever reached a price-to-sales ratio of 25 or more, just 21% beat the market over the following year.Even if Palantir's stock price dropped 50% tomorrow, it would still rank among the 150 most expensive companies in S&P 500 history.Here's a question that should matter to every investor in Palantir Technologies (PLTR 3.29%): Of all the S&P 500 companies that have ever traded at a valuation close to Palantir's, how many actually made investors money? The answer: extremely few. Palantir's stock is a member of a very small club The data analytics and artificial intelligence (AI) company is currently trading around $155 a share and has a market capitalization of $370 billion. The company brought in $4.5 billion in revenue last year, which means shares carry a price-to-sales ratio (P/S) of 87. That makes it the most expensive stock in the S&P 500. And not just today. Few companies that have ever been included in the index have carried a P/S like that. In fact, according to financial research firm WisdomTree, only 231 have ever reached a P/S of 25. The only S&P 500 companies to reach a P/S of 100 -- and Palantir has -- came during the irrational exuberance of the dot-com bubble. Image source: Getty Images. What history says about high P/S companies The WisdomTree report also said that, of the 231 companies that have reached 25 times sales, just 21% outperformed the market over the following year. Not crush it -- just beat it. The median relative return was a huge loss of 36%. And that gets worse the further you extend the time frame. Over three years, 9% came out ahead. Over 20 years, just 4%. And if you make the club more exclusive, things look even more bleak. Just 148 companies reached a P/S of 40. And only a few of them outperformed the market over the long haul: 3% over 20 years. And the truth is that many of the companies that lost at these valuations weren't bad businesses. A lot of them were growing revenue and earnings rapidly. They just couldn't live up to the expectations investors had placed on them. The bar for a company with a P/S of 40 is incredibly high. The bar for a P/S above 80 is in the stratosphere. 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% Palantir could double its revenue tomorrow and still be one of the most expensive stocks Yet Palantir is clearing that bar right now, and that is genuinely impressive. I am not arguing this point at all. The company is executing at a level that very few can match. The question is: For how long? I think that, as well as its executing, it could face some real issues scaling up in the not-so-distant future. For as much as it has differentiated itself, I'm not convinced it can continue to remain "one of a kind" while the Microsofts of the world pour billions into enterprise AI. Palantir's strongest moat is within the federal government, but it needs its enterprise business to grow to the kind of revenue figures that would justify its valuation. If the competition really heats up -- and I think it will -- management may find its ability to grow at 50%-plus a year impossible to maintain. The fact is that if Palantir's stock dropped 50% tomorrow, it would still be among the 150 most expensive companies in S&P 500 history. That's how much perfection is already priced in.Read NextMar 21, 2026 •By Geoffrey Seiler2 AI Stocks That Didn't Get the Memo That the Bull Market Hit a Speed BumpMar 21, 2026 •By Rick OrfordBetter AI Stock: Palantir vs. BigBear AIMar 20, 2026 •By Rick OrfordIs It Too Late to Buy Palantir, or Is the Market Still Missing Something?Mar 20, 2026 •By Manali Pradhan, CFAPalantir vs. CrowdStrike: Which AI-Powered Software Stock Will Dominate 2026?Mar 19, 2026 •By Johnny RicePalantir Stock Is 2,500% More Expensive Than the S&P 500 Average.

History Is Clear About What Happens Next.Mar 19, 2026 •By Lawrence NgaWhere Could Palantir Be in 3 Years?

The Base Case.About the AuthorJohnny Rice is a contributing writer for The Motley Fool covering tech stocks. He previously contributed to various financial publications.TMFJohnnyRiceStocks MentionedPalantir TechnologiesNASDAQ: PLTR$150.68(-3.21%)-$5.00*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.