Artificial intelligence stock Palantir (NASDAQ: PLTR) has been on my watchlist for years now. I’ve never bought it though due to its high valuation.
With the stock recently falling more than 35% from its highs, however, the valuation has come down quite a bit. So, I decided it was finally time to pull the trigger and get on the Palantir bandwagon.
A true AI beneficiary
Palantir’s unbelievable growth was a key factor behind my investment decision. This is a technology company that is benefitting from the AI revolution in a big way.
Just look at recent Q4 results. For the quarter:
- Revenue was up 70% year on year to $1.4bn
- US revenue was up 93% to $1.1bn
- US commercial revenue was up 137% to $507bn
I can’t remember the last time I saw an established company grow its top line at 70% year on year. That’s pretty much unheard of.
Note that for 2026, the company expects revenue growth of 61%. That’s mind-blowing.
It’s not just a top-line story here, however. Profits are also skyrocketing.
For the fourth quarter, net income attributable to common stockholders was up 670% year on year to $609m. Meanwhile, the company’s ‘Rule of 40’ score (revenue growth plus operating margin) was 127 (again, almost unheard of).
These results suggest that we have a very unique company here. This is not your average software company.
“Our customers aren’t tentatively trying AI. They’re committing to it at scale, with Palantir as the driving force.”
Ryan Taylor, Palantir Chief Revenue Officer and Chief Legal Officer
Earnings call insight
Reading through the Q4 earnings call transcript, there was one part that jumped out at me. It was a quote from an executive at a construction company who said: “We’ve gone all-in so much so that every other software must justify its existence, and so far they haven’t been able to. The ontology is the secret weapon. Nothing else comes close. And not only are we getting rid of third-party software; we’ve replaced their functionality and then beaten them to new features, all within the year, because of the ontology.“
Obviously, this is just one company’s feedback. But it suggests that Palantir has a powerful product.
Palantir’s ‘ontology’ is essentially the translation of data into understandable concepts. It allows users (humans and AI agents) to make decisions directly within the platform.
A small buy for me
Now, I’ll point out that my stock purchase was very small. Right now, Palantir is one of the smallest holdings in my portfolio.
I’ve started with a tiny position for a few reasons. One is that the stock is falling – the downtrend could have further to run.
Another is that the stock is still priced for very high growth (the price-to-earnings (P/E) ratio is about 100). Yet there’s no guarantee that the strong growth will continue.
I see a lot of potential in the long run, however. I plan to keep buying the stock on share price weakness and build up my position over time.
