"Is the market for artificial intelligence (AI) services past its expiration date? The jury is still out on that topic, but recently reported results from Palantir Technologies ( NASDAQ:PLTR) suggest that the AI frenzy is far from over. Lately, PLTR stock has been considered one of the best AI stocks to own now. On the other hand, as we'll discuss in a moment, the stock's price action during the past six months has been frustrating and confusing."
"There is a serious concern, though. If PLTR is up substantially over the past year, are there valuation-related red flags with Palantir? Traditional valuation metrics would suggest that the answer is yes. For one thing, Palantir has a trailing 12-month (TTM) price-to-earnings (P/E) ratio of 197.01x, which is a whopping 721.19% above the sector average. We're getting into some dangerous valuation territory here, it would seem."
Palantir stock has climbed 85% over the past 12 months but spent the last six months trading in an aimless range-bound pattern. A recent sharp one-day rally occurred while the NASDAQ 100 was declining, demonstrating relative strength and momentum that could propel shares toward and above $200, a level previously reached in 2025. Strong upside contrasts with valuation concerns: a trailing 12-month P/E of 197.01x and a trailing 12-month P/S of 88.63x far exceed sector averages by large margins, signaling possible overvaluation despite robust share-price performance. Investors must weigh momentum and resilience against traditional valuation metrics before positioning.
Read at 24/7 Wall St.
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