At What Price Is Palantir Stock a Buy?

The stock price of Palantir Technologies Inc. (PLTR) closed at $94.00 on April 23, 2025, reflecting a market capitalization of $220 billion. Yet, beneath this headline figure lies a stark disconnect between investor optimism and fundamental valuation metrics. To determine whether Palantir is a buy at current levels—or at any price—requires scrutinizing its financials, growth prospects, and the extreme multiples investors are paying.

A Price Tag Defying Gravity

Palantir’s valuation is anchored to its AI-driven data analytics platforms, which have fueled 30%-plus annual revenue growth over recent years. In 2024, revenue hit $2.9 billion, with management guiding for $3.8–4.8 billion in 2025. Yet, these growth rates pale against the metrics investors are pricing into the stock:

The stock’s P/S ratio of 78x—calculated as market cap divided by trailing twelve-month (TTM) revenue—ranks among the highest in the software industry. For context, Microsoft’s P/S is ~10x, and even high-growth AI peers like Wolters Kluwer or Appen trade at under 20x sales. Analysts argue that a 25x P/S multiple—still generous for a software firm—would imply a stock price of $30.50, a 67% discount to April 23’s closing price.

The Case for Caution

While Palantir’s cash flow ($1.15 billion in 2024 operating cash flow) and 12% EBITDA margins suggest operational health, its valuation multiples are unsustainable by historical or peer standards. The EV/EBITDA ratio of 168x—based on a $215 billion enterprise value and $1.3 billion in TTM EBITDA—exceeds even the most aggressive growth stocks.

Analysts at Zacks Investment Research have labeled Palantir a “Strong Sell”, citing its #5 Zacks Rank and 87% downside potential to a $4.67 “fair value” estimate derived from discounted cash flow models. Even bullish scenarios, such as hitting $4.8 billion in 2025 revenue, would still leave the stock trading at a 63x P/S ratio—far above what fundamentals justify.

The Buy Price: A Matter of Survival

For Palantir to become a “buy,” its valuation must align with realistic growth assumptions. Consider these thresholds:
1. 25x P/S Multiple: At this level—common for mature software firms—the stock would need to drop to $30.50, requiring a 67% correction from April’s price. This assumes 2025 revenue hits the high end of guidance ($4.8 billion).
2. Peer Alignment: Matching the 30x P/S multiple of Wolters Kluwer would set a target of $32.67, still a 65% decline.
3. Analyst Fair Value: The $4.67 median estimate implies a catastrophic 95% drop, suggesting investors should avoid the stock until a severe correction occurs.

Risks and Realities

Palantir’s valuation hinges on its AI-driven platforms scaling without disruption. However, risks abound:
- Competition: New entrants like Presight AI or cloud giants (e.g., Amazon, Google) could erode its edge.
- Profit Margins: While revenue grows, sustaining margins at 12% or higher is critical. A drop to single digits would further strain valuations.
- Market Sentiment: The stock’s $220 billion market cap assumes perfection—a steep bar in a volatile AI landscape.

Conclusion: A Buy at $30? Only If the Stars Align

Palantir stock is a “buy” only at drastically lower prices. At $30.50, the stock would trade at a 25x P/S ratio, reflecting a return to sanity after years of speculative overvaluation. Below that, the $4.67 fair value—implying a 95% decline—might signal a bottom.

Current investors face a grim reality: The stock’s 476x P/E ratio and 168x EV/EBITDA are pricing in flawless execution and no competition—a scenario few analysts deem plausible. Until Palantir’s valuation multiples shrink to levels comparable to its peers, the stock remains a speculative bet, not an investment.

For now, the math is clear: A $94 stock demands revenue growth of ~300% over five years to justify its P/S ratio. In a world of imperfect software companies and cutthroat AI competition, such a feat is nearly impossible. The buy price? Until the stock tests $30 or below, the answer is “not yet.”