Why Palantir Stock Soared in May
Shares of Palantir Technologies (NASDAQ: PLTR) were up in May. The company's stock finished the month up 11.3%. The move came as the S&P 500 (SNPINDEX: ^GSPC) was up 5.5% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) was up 7.9% during the month.
The artificial intelligence (AI)-powered data analytics company released mostly positive earnings and announced several key new partnerships, and CEO Alex Karp accompanied President Trump on a trip to Saudi Arabia.
Where to invest $1,000 right now? Our analyst team just revealed what they believe are the 10 best stocks to buy right now. Continue »
A mostly positive quarter
Palantir reported Q1 earnings per share (EPS) of $0.13 on sales of $884 million. That revenue figure was up 39% year over year (YOY), beating Wall Street expectations. There was some cause for concern, however, as global sales declined 10% YOY.
Karp goes to Saudi Arabia
Given this international weakness, the timing of Karp's trip to Saudi Arabia could not have been better. Karp, along with other high-profile CEOs, accompanied President Trump on a trip to the Middle Eastern country. The trip ended with Trump announcing that Saudi Arabia had committed to $600 billion in investments and, although specifics were light, some of this is likely to flow into Palantir's coffers.
New partnerships
Palantir announced new partnerships with xAI, the Joint Commission, and the manufacturer Fedrigoni. The partnerships will all leverage the company's unique capabilities to boost efficiency, maximize profits, and reshape outdated business practices. The wide range of distinct organizations and problems shows the incredible adaptability of Palantir's technology.
Beware the valuation
This is nothing new for investors who have followed the company at all, but the fact is that Palantir stock is incredibly expensive. The company's price-to-earnings ratio (P/E) currently sits north of 570. Its price-to-sales ratio (P/S) is 105. These are astronomical numbers.
Consider this: When Nvidia was seeing peak growth in 2024 -- growth that far outstrips what Palantir is delivering today -- the chipmaker's P/E and P/S were both roughly half that of Palantir's. And when Cisco was at its peak in 2000, before it became the face of the dot-com crash, it too only reached roughly half the valuation that Palantir now carries.
I do not believe Palantir can justify this valuation, and it is a matter of time before the stock comes back to Earth. Although it's clear that the company offers an extremely valuable product, I think it's fair to classify it as a meme stock at this point: Too much of its value is driven by pure hype.
Should you invest $1,000 in Palantir Technologies right now?
Before you buy stock in Palantir Technologies, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004... if you invested $1,000 at the time of our recommendation, you'd have $660,341!* Or when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $874,192!*
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