Palantir: Bubbles, Boot Camps, and the Future (Probably)

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Palantir. The name itself sounds like something conjured from a particularly dusty tome in the Unseen University’s library – a place, incidentally, where valuations are determined by the phase of the moon and the number of pigeons roosting on the gargoyles.1 This company, purveyor of Artificial Intelligence Platforms (AIPs – which sounds suspiciously like a wizard’s apprentice’s initials), has enjoyed a rather… enthusiastic ascent. Since the depths of December 2022, its stock has performed a feat of numerical gymnastics that would make even the most seasoned gnome accountant blush – a 2,700% leap. Nvidia, that other purveyor of magical components, managed a respectable 1,200%, but Palantir has, shall we say, out-magicked them.

This begs the question, naturally: is this a rational valuation, or merely the result of a collective enchantment? The Guild of Alchemists and Venture Capitalists, you see, are particularly susceptible to shiny objects, and Palantir, for the moment, is exceedingly shiny.

The Numbers and the Narratives

Unfortunately for those lingering on the sidelines, Palantir carries a premium that would make a dragon hoard look modest. A price-to-earnings (P/E) ratio of 388 is… ambitious.2 One might dismiss it as mere exuberance, but then one encounters the forward P/E of 164, and a certain sense of unease begins to creep in. The price-to-sales (P/S) ratio of 108 and the price-to-book ratio of 60 don’t exactly soothe the nerves either. It’s a valuation that suggests the company is not merely expecting to succeed, but has already achieved enlightenment.

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However, growth investors, those brave souls who gamble on potential, may be willing to pay the price. And, to be fair, the growth is notable. In the third quarter of 2025, revenue clocked in at almost $1.2 billion – a 63% year-over-year increase. The U.S. revenue alone jumped 77%. And it’s not slowing down. Q2 2025 saw a 48% increase, Q1 2025 a 39% rise. It’s a positively accelerating trend.

Profit growth is equally impressive. Net income attributable to shareholders soared to $476 million in Q3, a significant leap from the $144 million profit in the same quarter the previous year. It’s enough to make a troll tax collector weep with envy.

Still, even the most ardent believer must concede that sustaining this trajectory is… challenging. Analysts predict a 54% revenue increase for 2025, but expect that to dip to 42% in 2026. The laws of physics, and indeed, the laws of economics, generally frown upon perpetual motion.

The question, then, isn’t merely whether Palantir can continue to grow, but whether it can grow enough to justify the current valuation. Will continued increases propel the stock higher, or will investors, faced with a slowing growth rate, finally decide that the price is, shall we say, a bit… optimistic?

Can Palantir Justify the Enchantment?

Ultimately, time will tell. But given the likelihood of a correction as revenue growth inevitably moderates, prudence suggests avoiding further investment at current levels. The productivity gains from AIP are undoubtedly real and could sustain growth for years. However, valuations currently price Palantir for perfection, and perfection, as anyone who’s met a dwarf will tell you, is a rather demanding standard.

The stock is, therefore, more likely to fall than rise. It’s a simple, if slightly cynical, observation. And cynicism, after all, is merely realism with a sense of humor.3

  1. The Unseen University, for those unfamiliar, is a bastion of magical learning where the pursuit of knowledge is frequently hampered by administrative incompetence and a fondness for sherry.
  2. A P/E ratio, in layman’s terms, is a measure of how much investors are willing to pay for each dollar of earnings. A high P/E ratio suggests that investors have high expectations for future growth. Or, perhaps, they’ve been sampling the aforementioned sherry.
  3. It is a well-known truth that the world is governed by forces beyond our understanding, and that most of them are deeply annoyed by our attempts to understand them.

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2026-01-27 03:53