Do you think Palantir shares are too expensive? 1.28 billion reasons that can change your mind

• Despite cuts on the Pentagon, Palantir has succeeded in continuing to win business with the US Army.

• The company has just won a contract extension of $ 795 million, which resulted in the total deal value at $ 1.28 billion.

• Palantir shares are more expensive than his colleagues in the software landscape.

• 10 shares that we like than Palantir Technologies ›

The stock market has been overwhelmed by uncertainty this year this year. Current negotiations with regard to the rates of President Donald Trump, mixed economic data and the potential for reducing the FED rate, investors have both curious and anxious. With so many strangers around the macro -economic image, it is no wonder that the momentum de S&P 500 And Nasdaq Composite Indexes for the past few years have come to a halt.

Despite all the uncertainty about the capital markets, some shares continue to make a profit in 2025. One of the most striking winners of the year is Palantir Technologies (Nasdaq: PLTR)which has risen 77% from this letter, making it the best performing stock in the Nasdaq-100 and S&P 500.

While the epic rally of Palantir continues, some prominent investors on Wall Street have dumped the shares – probably because of the valuation problems.

Let us explore Palantir’s newest victory and assess how the progress of the company feeds an unprecedented enthusiasm for the shares. From there I will analyze some rating trends to determine whether the stock is currently a good buy.

If you look at Palantir’s stock prize process in 2025, it can be difficult to digest at first sight. In February, Palantir shares fell after the news had broken that the President had ordered the Ministry of Defense (DOD) to lower her budget. Palantir not only derives more than half of its cases from government contracts, but many of the relationships of the company are connected to the army. The sale earlier this year is a clear example of panic -driven, emotional behavior, because investors feared that Palantir would be a victim of the Department of Government Efficiency (Doge).

After the first news about the DOD cuts, the Minister of Defense Hegseeth started to drop some breadcrumbs, so I thought Palantir might have benefited from the reductions of government spending.

In particular, Hegseeth announced that he wanted to double on a previously set policy called the Software Acquisition Pathway (SWP). I saw that as an opportunity for Palantir to present his Artificial Intelligence (AI) software -Playbook and possibly replace the existing infrastructure in the Pentagon as part of the budget procedures.

Although it is still early for this new initiative at the DOD, Palantir does indeed seem to benefit. At the end of May, the DOD announced that Palantir received a software license of $ 795 million for his Maven Smart System (MSS). Although that would be a big win alone, consider the fact that this deal was an extension of the original MSS deal of Palantir, worth around $ 480 million.

In essence, while the Dod cleans the house and is looking for areas to reduce expenses, Palantir has succeeded in strengthening his relationship with the US Army – only to convert one MAVEN contract into a $ 1.28 billion deal.

As Palantir Bull, I fully understand the excitement around the company. And although the new Maven contract is impressive, smart investors understand that haunting Momentum is not a sensible strategy based on headlines.

Palantir is traded at a price sales (p/s) ratio of more than 100 from this letter. This is three times higher than the next nearest stock in the software pear group shown above. Moreover, Palantir’s P/S-Meerder has witnessed what investors have witnessed, even during the peak euphoria of the Dot-Com bubble.

Given this context, not only Palantir shares is pricey, but I would claim that it is historically overvalued.

When it comes to expensive momentum shares, it is obvious that some investors feel that they have missed the boat and are looking for alternatives.

But I wouldn’t do that when it comes to Palantir. The ability of the company to thrive and grow during such a turbulent economic image underlines how important Palantir becomes in the wider AI landscape.

However, the high valuation is a risk, so a reasonable strategy is to buy Palantir shares with regular intervals and varying prize points (an approach that is also known as a dollar cost averages).

The newest Maven -deal can be a catalyst to change your mind of investors about the general opportunity that Palantir offers, but it is not necessary to hurry up the stock at the moment.

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Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions and recommends Cloudflare, Crowdstrike, DataDog, Mongodb, Palantir Technologies, ServiceNow and Snowflake. The Motley Fool has a disclosure policy.

Do you think Palantir shares are too expensive? 1.28 billion reasons that could change ideas were originally published by the Motley Fool