Is Palantir Stock a Buy in 2025 After Its 340% Gain in 2024? Wall Street Analysts Have a Surprising Answer

Palantir Technologies(PLTR 3.65%) shareholders had a fantastic year in 2024, with the stock gaining an impressive 340%. This performance made Palantir the best-performing component of the S&P 500(^GSPC 1.00%). However, despite this remarkable run, Wall Street analysts are surprisingly bearish on the stock. In fact, only six stocks in the S&P 500 have a higher percentage of sell ratings than Palantir, and the median price target of $39 per share implies a 45% downside from its current price of $71.77. So, is Palantir stock still a buy in 2025, or should investors be cautious?



Palantir is a good business with compelling growth prospects in artificial intelligence
Palantir is a data analytics software company, and its core products, Foundry and Gotham, help businesses integrate complex information, build machine learning models, and query data. Its artificial intelligence platform, AIP, adds support for large language models to Foundry and Gotham, enabling clients to apply generative AI to their operations. The company has received glowing praise from industry analysts, with Forrester Research recognizing it as a leader in AI/machine learning platforms and Dresner Advisory Services listing it as one of the top-ranked vendors in its 2024 market study on artificial intelligence, data science, and machine learning software. The International Data Corporation estimates that AI platform sales will increase at an annualized rate of 41% through 2028, presenting a significant opportunity for Palantir to capitalize on.



Palantir is executing on that opportunity. The company beat Wall Street's high expectations on the top and bottom lines in the third quarter. Its customer count increased by 39% to 629, and its average existing customer spent 18% more than in the prior-year period. Revenue increased by 30% year over year to $726 million, marking its fifth consecutive sequential acceleration, and non-GAAP earnings increased 43% to $0.10 per diluted share. CEO Alex Karp attributed the company's success to the release of its newest platform, AIP, which has transformed its business and accelerated its growth.

Palantir is a very expensive stock despite its compelling growth prospects
While Palantir has compelling growth prospects from a business perspective, that does not necessarily make the stock a buy. The company's valuation has expanded alongside its share price, and it currently trades at a forward price-to-earnings ratio of 158 and a forward price-to-sales ratio of 41. These metrics suggest that the stock is overvalued, and investors should be cautious about buying it at current levels.

Wall Street analysts have a surprising answer: Palantir stock is not a buy in 2025
Given Palantir's impressive 2024 performance and compelling growth prospects, it may seem counterintuitive that Wall Street analysts are overwhelmingly bearish on the stock. However, the analysts' median price target of $39 implies a 45% downside from the current price, suggesting that they believe the stock is overvalued. While Palantir's business fundamentals are strong, its valuation metrics indicate that the stock is priced for perfection, and any disappointment in its financial performance could lead to a significant decline in its share price.



In conclusion, while Palantir Technologies has had an impressive run in 2024 and has compelling growth prospects in the artificial intelligence space, its valuation metrics suggest that the stock is overvalued. Wall Street analysts are overwhelmingly bearish on the stock, with a median price target that implies a 45% downside from its current price. Investors should be cautious about buying Palantir stock at current levels and consider waiting for a more attractive entry point.