Q: Palantir just posted 85% revenue growth. Is this still a great business?

A: By almost every operating measure, yes. First-quarter 2026 revenue rose 85% year-over-year to $1.6 billion, the fastest pace since the 2020 direct listing, powered by 133% growth in U.S. commercial revenue as enterprises adopt the Artificial Intelligence Platform, or AIP. The company is GAAP-profitable, runs a 60% adjusted operating margin, converts more than half of revenue into free cash flow, and carries no debt. Its Rule-of-40 score, which adds revenue growth to free cash flow margin, sits at 145%, roughly triple the threshold that defines a healthy software company. Management raised full-year guidance to about $7.66 billion, up 71%.

Q: So why isn’t this a Buy?

A: Price. Even after a 36% drawdown from December’s high of $207, the stock trades near 41 times forward sales and well over 90 times forward earnings, multiples that already assume years of close-to-flawless execution. A scenario-weighted fair value lands around $135, essentially where the stock trades today. That means upside toward $200 and downside toward $80 look roughly symmetric from here. Buying for superior risk-adjusted returns requires the odds to tilt in the buyer’s favor, and right now they don’t.

Q: What’s the biggest risk to that setup?

A: Multiple compression. Even if revenue keeps compounding, the sales multiple can fall faster than the business grows, and Palantir’s shareholder base is unusually retail-heavy, at roughly 40% of the float, which tends to make de-ratings sharper and faster. Heavy stock-based compensation and steady insider selling under pre-arranged plans are secondary concerns worth watching, though not disqualifying ones given the cash the business throws off.

Q: Where does the moat actually hold up?

A: Government and defense, where deep accreditation requirements and extreme switching costs protect roughly 55% of revenue. Commercial is more contested, with Databricks, Snowflake, and the major cloud platforms all pushing AI tools closer to where customer data already lives. Palantir’s edge there is real but has to be defended quarter after quarter rather than assumed.

Q: What would flip this to a Buy?

A: A pullback into the $95-110 range, which would value the stock closer to 28-32 times forward sales, or two-plus quarters of evidence that U.S. commercial growth holds up while the multiple stays intact. Either would suggest the company is growing into its price rather than the price outrunning the company.

The full financial breakdown, scenario analysis, and valuation model are in the complete Palantir (PLTR) report on our Reports page.