Palantir: A Mildly Improbable Investment

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Charles Dickens, a man who understood the inherent chaos of existence (and the frustratingly slow pace of Victorian postal services), began A Tale of Two Cities with a rather astute observation about times being simultaneously good and bad. Last week, for Palantir Technologies (PLTR +5.16%), felt distinctly Dickensian. One might even suggest it involved a surprisingly large number of top hats. (Though this is unconfirmed. We’re still waiting for the photographic evidence.)

The company, purveyors of AI software – which, let’s be honest, sounds suspiciously like something from a particularly ambitious science fiction novel – reported quarterly results that could generously be described as ‘robust’ on February 2nd, 2026. Yet, by the end of the week, the market had decided that ‘robust’ was, in fact, ‘slightly less robust than anticipated,’ and Palantir’s stock value had diminished by approximately 8%. A staggering $28 billion simply…vanished. (One hopes it didn’t fall into a dimensional rift. Accounting for dimensional rifts is, as you might imagine, a nightmare.)

This raises the inevitable question: should one acquire Palantir stock with unrestrained enthusiasm following this recent market correction?

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The Bull Case: Firing on All Cylinders (Mostly)

The argument for optimism, as far as it goes, is fairly straightforward. Palantir continues to demonstrate growth, which, in the grand scheme of things, is rather important for a company hoping to remain solvent. Their Q4 results, viewed through the lens of optimistic accounting (a surprisingly common practice), were undeniably positive.

Year-over-year revenue increased by a rather impressive 70% in Q4, and sequentially by 19%. Growth was, as these things often are, unevenly distributed. The U.S. commercial segment, in particular, experienced a surge, with revenue increasing by a frankly astonishing 137% year over year. (One wonders if they’ve discovered a way to sell slightly more efficient existential dread. It’s a growing market.)

The company closed 61 deals worth at least $10 million and a further 180 deals exceeding $1 million. Their customer base expanded by 34% year over year. (This suggests a surprisingly effective sales team, or perhaps a compelling offer involving complimentary tea cozies.)

Earnings skyrocketed 7.7x year over year to $608.7 million. Q4 adjusted earnings per share (EPS) reached $0.25, exceeding Wall Street’s consensus estimate of $0.23. (A triumph of decimal points, really.)

Looking ahead, Palantir anticipates year-over-year revenue growth of 61% in 2026. Ryan Taylor, the Chief Revenue Officer, confidently declared that “everything we’ve built over two decades is converging into this moment.” (One hopes this convergence doesn’t involve a singularity. Those rarely end well.)

The Bear Case: Priced for Perfection (and Possibly a Parallel Universe)

However, a dissenting viewpoint exists, and it’s worth considering. Even after the recent market adjustment, Palantir’s valuation remains…ambitious. The shares currently trade at 125 times forward earnings. Some argue this is justified by the company’s prodigious growth. However, the price-to-earnings-to-growth (PEG) ratio, a metric designed to incorporate analysts’ five-year earnings growth projections, stands at a lofty 3.6. (Which, in the context of financial ratios, is rather like claiming to have discovered a new dimension. Intriguing, but difficult to verify.)

Predictably, a significant portion of Wall Street remains skeptical about the sustainability of Palantir’s recent momentum. Less than half of the analysts surveyed by S&P Global (SPGI +1.12%) in February recommended buying the stock. (Analysts, it should be noted, are frequently wrong. It’s a fundamental law of the universe, akin to entropy.)

Some might also argue that Palantir isn’t firing on all cylinders. International commercial revenue increased by a mere 8% year over year in Q4. CEO Alex Karp candidly admitted that the company lacks the bandwidth to tackle difficult projects outside of America. (This suggests a surprisingly limited number of skilled personnel, or a deeply ingrained preference for American-style coffee.)

Palantir faces a staffing challenge that hinders its ability to capitalize on opportunities beyond U.S. borders. The company is attempting to recruit more talent, but Karp hinted at a significant cultural issue, stating, “We don’t do acquisitions because we are a thick, dense culture, which means you’d have to fit in.” (This is a remarkably honest admission, and one that suggests a surprisingly rigid corporate identity.)

To Buy or Not to Buy?

So, returning to our initial question: should investors embrace Palantir stock with unbridled enthusiasm following this recent sell-off? The answer, as is often the case with complex financial instruments, is frustratingly nuanced. It depends entirely on your individual perspective and risk tolerance.

Investing in Palantir requires a belief in one of two things. Either you expect the company to grow so rapidly that its valuation metrics become more palatable, or you simply believe that conventional valuation metrics are irrelevant for a company that refers to itself as “an n of 1.” It’s entirely possible to admire Palantir’s business model and anticipate robust growth, but still conclude that this growth isn’t sufficient to justify its premium price.

I fall into the latter camp. As Benjamin Graham wisely observed, “In the short run, the market is a voting machine, but in the long run, it is a weighing machine.” I remain unconvinced that Palantir’s growth will ultimately outweigh its current valuation. (And frankly, I have a rather pressing need to calculate the probability of encountering a rogue black hole while commuting to work.)

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2026-02-10 12:53