Are Palantir Stocks a Buy in 2026?

• For the second year in a row, Palantir is one of the best performing stocks in artificial intelligence (AI).

• The company won a number of historic contracts and formed a number of interesting alliances this year.

• While it has proven that it can compete in the enterprise software world, the company’s valuation now needs a close look.

• 10 stocks we like better than Palantir Technologies ›

At the time of writing, the shares belong to a data analytics specialist Palantir Technologies (NASDAQ:PLTR) have increased by 150% this year. This makes it the eighth and third best performing stocks in the US S&P500 And Nasdaq-100in 2025 respectively.

Let’s analyze Palantir’s epic performance this year and assess whether the artificial intelligence (AI) darling can keep up the momentum heading into 2026.

Palantir offers a range of AI-powered software tools, including Foundry, Gotham and Apollo. These platforms specialize in unifying workflows across systems to help large enterprises make sense of messy data.

If the above financial profile is any indication, it seems appropriate to say that demand for Palantir’s Artificial Intelligence Platform (AIP) is exceptionally strong. In 2025, the company won a number of landmark deals and also formed some interesting strategic partnerships:

• It was awarded a contract worth up to $448 million with the US Navy, which will use Foundry and AIP to improve its shipbuilding operations and supply chain protocols.

• Over the summer, Palantir struck a deal with the U.S. military worth up to $10 billion over the next decade.

• The company recently entered into a partnership with Nvidiawhich tightly integrates Palantir’s data mining expertise with the chip designer’s strengths in graphics processing units (GPUs) and CUDA software architecture. This effectively creates a full-stack operating system for accelerated computing.

Through the first nine months of 2025, Palantir’s commercial and government businesses have grown by about 50% each. This is especially impressive considering that the company relied heavily on public sector deals for much of its history before the AI ​​revolution.

Palantir has proven that it can compete at a high level in the world of enterprise software – a market once dominated by companies like Salesforce And JUICE. When it comes to new disruptors making headway against the industry’s incumbents, Palantir stands out from the competition.

Palantir’s price-to-sales ratio (P/S) of 117 is more than three times that of its peers among the software-as-a-service (SaaS) companies mentioned above. Sometimes trading at a premium may be justified given a company’s performance and prospects. But in the case of Palantir, I think its valuation has become overextended.

Before the Internet bubble burst, early Internet pioneers loved it Cisco, MicrosoftAnd Amazon peaked at P/S levels between 30 and 50. As history shows us, even the largest contributors to the Internet were unable to sustain their frothy valuations after the bubble burst.

In my opinion, this is a difficult stock to gauge. On the one hand, I think the company has become a formidable leader at the intersection of software and AI. Against this background, I am optimistic about the long-term prospects.

On the other hand, Palantir’s valuation seems irresponsibly high. While history doesn’t exactly repeat every detail, it seems very likely that the stock will undergo a correction in some way. Shares could sell off during a broader macroeconomic correction in the AI ​​market, or investor expectations could become out of alignment with the company’s underlying performance, leading to a share price decline.

In my view, Palantir Technologies has largely become a momentum stock with tremendous unpredictability. While I think the company is in good hands long-term, the stock currently appears overbought. For these reasons, I would continue to monitor the company’s performance relative to its valuation, but look for more appropriate and reasonable entry points in 2026.

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Adam Spatacco has positions at Amazon, Microsoft, Nvidia and Palantir Technologies. The Motley Fool holds positions in and recommends Amazon, Cisco Systems, Cloudflare, CrowdStrike, Datadog, Microsoft, MongoDB, Nvidia, Palantir Technologies, Salesforce, ServiceNow, and Snowflake. The Motley Fool recommends SAP and recommends the following options: long January 2026 $395 calls at Microsoft and short January 2026 $405 calls at Microsoft. The Motley Fool has a disclosure policy.

Are Palantir Stocks a Buy in 2026? was originally published by The Motley Fool