Is Palantir overvalued?
On any conventional measure, yes. It also keeps delivering the growth that would justify it — nine consecutive beats and counting. Both are true, which is why the argument never ends. Here's each case, and the numbers that would actually settle it.
The short answer
On any conventional measure, yes — Palantir trades at a multiple that assumes years of exceptional growth continuing without interruption. The counter-argument is that it keeps delivering that growth, and has now done so for nine consecutive quarters. Both things are true at once, which is why the debate never resolves. What follows is the actual case each way, and the specific numbers that would settle it.
Why the bulls are winning the argument right now
The growth is accelerating, not decaying
Most companies growing at 90% are small. Palantir is doing it at scale, and the rate went up rather than down. US commercial revenue growing 149% is the number that matters most, because it's the part least dependent on government budgets and the part that proves the software sells on its merits.
It generates real cash
$1.22bn of free cash flow in a quarter is not a story stock burning investor money. Gross margins above 80% and a return on equity in the mid-20s are the economics of genuinely good software.
Contract value is growing faster than revenue
Total contract value up 49% is forward-looking. It means work is being signed faster than it's being recognised, which is the healthiest possible shape for a software business.
Why the bears aren't wrong either
The multiple requires perfection for years
This is the whole bear case and it doesn't depend on disliking the company. At the multiples Palantir trades on, the current price already discounts many years of high growth. Meeting expectations does nothing for the share price; only exceeding them does. That's a demanding treadmill.
Government concentration
A large share of revenue still comes from government contracts, which are lumpy, politically determined and slow to renew. Commercial growth is reducing that dependence, but it hasn't removed it.
Customer concentration inside commercial
Very high growth from a relatively small commercial base means a handful of large deals move the numbers. Worth checking how much of that 149% came from how few customers.
Stock-based compensation
Adjusted earnings exclude it; shareholders don't get to. Compare the adjusted figure with the GAAP one, and track the share count over several years — growth that arrives alongside meaningful dilution is worth less per share than the headline suggests.
How to value something growing at 90%
Conventional multiples break down here, and pretending otherwise is how people talk themselves into or out of these companies badly. A price-to-earnings ratio on a company reinvesting everything into growth tells you almost nothing.
The honest method is a reverse discounted cash flow. Instead of asking what it's worth, ask what growth rate the current price already implies — then decide whether that's achievable. If today's price requires 40% annual growth for a decade, you're not asking "is this a good company" but "will this company do something almost no company has ever done". That's a much more useful question, and see how intrinsic value is calculated for the mechanics.
What would actually change the answer
US commercial growth in the next two quarters
The bull case rests on this continuing. Deceleration from 149% toward, say, 60% would still be excellent and would still hit the shares hard, because the multiple assumes the higher number.
Net dollar retention
Whether existing customers spend more each year. In software this predicts durability better than headline growth.
GAAP earnings converging with adjusted
The gap is mostly stock compensation. Narrowing it means growth is being funded by the business rather than by shareholders' ownership.
Government renewals
Lumpy by nature. A missed renewal in a quarter can look like a trend break when it isn't — and vice versa.
The plain conclusion
Palantir is priced as though the next decade goes extremely well. If it does, the current price will look reasonable in hindsight. If growth slows to merely strong, the shares can fall a long way while the business keeps doing fine — which is the specific risk of buying an excellent company at a demanding price, and it has very little to do with whether the company is any good.
What growth is already in the price?
Oak Growth publishes a discounted cash flow intrinsic value and margin of safety for roughly 1,000 companies across eight markets — so you can see what today's price already assumes.
Explore Oak GrowthCommon questions
Is Palantir overvalued?
On conventional measures it trades at a multiple assuming many years of exceptional growth continuing. The counter-argument is that it keeps delivering — second-quarter 2026 revenue rose 92.8% with US commercial up 149%, and it beat expectations for a ninth consecutive quarter. Whether that justifies the price depends on how long you think that rate persists.
Why did Palantir stock jump?
Second-quarter 2026 results beat expectations by a wide margin — adjusted earnings of $0.41 against $0.28 expected, revenue up 92.8% to $1.935bn, US commercial revenue up 149% — and the company raised full-year guidance to around $8.15bn from roughly $7.65bn. The shares rose about 27% in a day.
How do you value a company growing at 90% a year?
Conventional multiples break down. A more useful method is a reverse discounted cash flow: work out what growth rate the current share price already implies, then judge whether that rate is achievable. It converts an unanswerable question about value into a checkable question about expectations.
What are the risks with Palantir?
The main one is that the price requires sustained exceptional growth, so even a slowdown from extraordinary to merely strong could hit the shares hard. Beyond that: continuing government revenue concentration, reliance on a small number of large commercial deals, and stock-based compensation that adjusted earnings exclude but shareholders bear through dilution.
Also see: Are AI stocks overvalued? → · How to calculate intrinsic value → · Margin of safety →