Palantir: Indispensable but Overvalued (New One-Year Price Target $48.50)

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Thomas Third Capital

Investment Research Report: Palantir Technologies (NYSE: PLTR)

March 10, 2025

Palantir: Indispensable but Overvalued

Investment Thesis

Palantir Technologies (PLTR) is one of the most significant and indispensable technology companies in the world. With its cutting-edge artificial intelligence (AI), machine learning (ML), and data fusion platforms, Palantir plays a critical role in helping governments and enterprises harness data for informed decision-making. Despite its importance, we believe that Palantir is not an attractive investment at its current valuation. With a market capitalization of approximately $179 billion, a price-to-earnings (P/E) ratio of 400, and a price-to-sales (P/S) ratio exceeding 60, the stock is excessively overvalued relative to both its growth trajectory and governance structure. Our 12-month price target stands at $48.50, while we estimate the fair value to be closer to $32.30 per share.

The Strategic Significance of Palantir

Palantir’s suite of products—Foundry, Gotham, and Apollo—empower organizations to integrate vast amounts of data into actionable intelligence. The company’s advanced AI and ML capabilities position it at the center of the AI revolution, making it a crucial partner for both commercial enterprises and government agencies. Palantir’s data fusion technology is unparalleled in its ability to provide real-time insights that drive operational efficiency, security, and strategic planning.

Market Dominance and Growth

Revenue Growth: Palantir’s total revenue grew 29% in 2024 to $2.87 billion. For 2025, Wall Street expects revenue to grow 32% to $3.79 billion, while Palantir has guided for $3.75 billion.
U.S. Commercial Expansion: U.S. commercial revenue surged 54% in 2024 to $702 million and is expected to continue growing at the same rate in 2025.
Government Contracts: U.S. government revenue grew 30% to $1.2 billion in 2024, highlighting the company’s entrenched role in national security and intelligence.
Enterprise Adoption: Palantir ended 2024 with 711 customers, up from 497 at the end of 2023, and secured 32 deals worth at least $10 million in Q4 2024.

Despite these impressive fundamentals, the valuation remains a significant concern.

Valuation and Governance Concerns

While Palantir’s technology and market positioning are exceptional, the stock’s valuation is difficult to justify.

Excessive Valuation Multiples: Trading at over 60 times trailing twelve-month revenue and a P/E ratio of 400, Palantir’s valuation is stretched even when factoring in its strong growth.
Insider Selling and Governance Issues:
- CEO Alex Karp and other insiders are selling massive amounts of shares, signaling a lack of confidence in the current valuation.
- Karp recently amended his SEC filings, allowing him to sell up to 9.975 million shares by September 12, 2025—over $1 billion in stock.
- Palantir’s share structure gives insiders disproportionate control, with Class B shares carrying 10 votes each and Class F shares having variable voting power. This structure allows founders to maintain control while offloading economic ownership, reducing investor influence over corporate decisions.
Investor Implications: Given these factors, Palantir should not command the valuation premium typically assigned to companies with more equitable governance structures.

Valuation Target & Investment Recommendation

We at Thomas Third Capital believe that Palantir’s current valuation is unsustainable. Our analysis suggests a fair value of approximately 20 times projected 2025 revenue, or $75.8 billion. However, given the market’s enthusiasm for Palantir and other AI-related stocks, we expect Palantir to trade at approximately 30 times 2025 revenue over the next 12 months, leading to a price target of $48.50.

Price Targets:

12-Month Target Price: $48.50
12-Month Estimated Fair Value: $32.30

Final Thoughts

Palantir is undeniably one of the most important technology companies in the world, playing a crucial role in AI-driven data analytics for governments and enterprises alike. However, at its current valuation, the stock presents an unattractive risk-reward profile. While its long-term potential remains intact, investors should probably exercise caution at these elevated levels.

Disclaimer: I/We do not own a position in Palantir (PLTR).

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