Should You Buy Palantir Stock on the Dip? | PLTR Stock Deep Dive Part 1

Hinzugefügt: 2026-05-07

[00:00:00]Palantir reported quarterly financial results yesterday and the stock price is down almost 7% as of this recording on the day after.

[00:00:08]Of course, I've been warning investors that Palantir stock was too expensive and I've been saying that for over 6 months now.

[00:00:16]The share price is down over 27% in that time. In this video, part one of my deep dive into Palantir stock, I'm going to answer the question if this dip is a buying opportunity or if Palantir stock is too expensive even though it's an excellent company. I want to thank The Motley Fool for sponsoring this video.

[00:00:36]Visit fool.com/par Kev for the 10 best stocks to buy now. But even though Palantir's share price has been falling, the business performance has continued improving. It's a rare situation where a stock price is declining while the business performance is improving. And the only reason why that's happening, or I should say one of the main reasons why that's happening, is because Palantir share price had soared so much in anticipation of these excellent results already. Initially, when Palantir started to turn things around and re-accelerate revenue growth, its stock price soared even before the performance justified that kind of an increase. But now, the performance is truly catching up to the share price.

[00:01:24]And just in the most recent quarter, they reported 85% revenue growth. This is their highest ever quarterly revenue growth rate as a publicly traded company.

[00:01:35]Their US business is now 79% of total revenue, and that's better for investors because this part of its business is growing more quickly and it's more aligned with the ideas of the management team, right? This is a very pro United States company and it makes sense that most of its revenue comes from the United States. They talk about why they're succeeding here and they say when you want AI to work in production in a real enterprise at real scale where there's no room for slop, there's only one platform and that's AIP from Palantir. And this is partly true. A lot of the artificial intelligence announcements and things that you're seeing are not very useful on enterprise scale.

[00:02:29]And this what this means is you you might be able to create one nice looking video using artificial intelligence, but this isn't something that you can turn into a real business. It's not something that can you can replicate over and over again and have it meet quality standards enough to publish and make it a real business. Or if you're a real business, it's not something you can incorporate on an enterprise-wide scale. And I found this to be true for several of the things that I've tried using the large language models and prompting and reiterating.

[00:03:14]It might be good for once in a while for something, but to replicate to use on an enterprise scale, it's just not ready. It's just a lot of waste of time prompting and re-prompting and waiting and prompting and re-prompting and the end result is mediocre at best, I would say. This is in my experience. You might in your use case, you might have a different experience. But if you're a big enterprise and you really want to put AI into production, then Palantir truly helps with that mission. And it's best in class in its category. It's the most expensive service, but it's also the best in class by at least one step. I wouldn't argue against you if you told me that Palantir is at least two steps ahead of the competition. So, they've been saying for years that large language models are improving, models are converging, they're all becoming, you know, similar.

[00:04:14]And the cost per token continues to drop precipitously.

[00:04:19]So, the output from large language models, the cost for enterprises, is dropping hugely. And that's good news because of the increased efficiency, there's more use cases for using artificial intelligence because the cost is lower, it makes more tasks profitable that meet the threshold. So, this is called, you know, Jevons paradox, which means, you know, as something gets cheaper and more efficient, the number of tasks you can economically assign to that activity increases, and so demand increases even though the activity becomes cheaper. And so, this is what Palantir is alluding to with artificial intelligence because it's getting cheaper, the number of things that enterprises can do with AI is increasing. So, given that big share price drop with Palantir over the previous 6 months, coupled with the fact that the business is improving, the valuation has gotten reasonable again. Right? Before this big surge in uh late 2024, remember there was so much excitement surrounding Palantir following the election of Donald Donald Trump, and the share price soared from a valuation of around a forward PE of around 100, it jumped all the way up to a forward PE of about 250.

[00:05:41]And I warned that this was too much too quickly. And since then, the valuation has come down dramatically. It's now trading at a forward price to earnings of 105, a forward price to operating cash flow of 83, right around the levels it was at before the election of Donald Trump and the subsequent surge in Palantir's share price. There was a lot of enthusiasm for a lot of stocks when President Donald Trump got elected. And it's been an up-and-down roller coaster ride here for Palantir. It's down over 27% in the previous 6 months, while the business keeps reporting excellent performance like they just did in the most recently completed quarter. So, given the update Palantir just provided, I revised and incorporated that into my discounted cash flow valuation. And again, it had the impact of increasing the intrinsic value per share for the company, which over the past 6 to 8 quarters, I've kept the revising higher and higher and higher my intrinsic value per share calculation for the company as they've kept delivering excellent and excellent and excellent quarterly financial results. The intrinsic value per share now jumped to $130 per share, and the [snorts] market price of the company has come down to $136 per share.

[00:07:03]So, that mismatch between the market price and my intrinsic value has closed.

[00:07:08]When you incorporate a margin of safety here, the stock looks fairly valued whether I measure on an intrinsic value or whether I measure using the market multiples basis. And since I rank Palantir as one of the best businesses in the world, when you look at revenue growth, when you look at profit margins, when you look at competitive advantages, total addressable market opportunity, competition, all of the important factors I consider when I'm evaluating a business, Palantir ranks extremely highly on. And the only downside for Palantir, the only reason why I had not rated the stock as a buy is because the valuation was too expensive even though the business was an excellent business.

[00:07:50]The market price reflected too much of a premium. Right now, I don't think it's too much of a premium. And so, for the first time in a long time, I've upgraded Palantir stock to a buy on May 5th, 2026. But, before you make a decision on buying or selling Palantir stock, I recommend you watch the rest of my deep dive into Palantir stock. The next video in the series is popping up on your screen.

[00:08:17]If you can't see it just yet, you can join as a member. The video is early access for members only. It'll be available to everyone else shortly.