<div id="readability-page-1">Every stock has its ups and downs. For Palantir Technologies (PLTR -0.83%) there were lots more ups than downs -- until this spring. That's when Palantir took a tumble when concerns about its valuation reared their ugly head. And it happened again just recently, as the stock stumbled its way through August and most of September. But now that roller coaster is headed back up -- Palantir stock is less than 4% off its all-time highs and up 25% on the year. But the valuation issues haven't gone away. If anything, they're just getting worse. So, is Palantir a buy here? <div><img src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzUxMTAvZ2V0dHlpbWFnZXMtMTcwNjM5MDg4OC5qcGcmdz03MDA?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" width="700" height="466" original-src="https://imageproxy.pbkrs.com/https://g.foolcdn.com/image//query-b3A9cmVzaXplJnVybD1odHRwczovL2cuZm9vbGNkbi5jb20vZWRpdG9yaWFsL2ltYWdlcy84MzUxMTAvZ2V0dHlpbWFnZXMtMTcwNjM5MDg4OC5qcGcmdz03MDA"/>Image source: Getty Images. </div> <h2>Palantir is becoming a dominant AI stock</h2> The thing that sets Palantir apart is its Artificial Intelligence Platform (AIP). It's a powerful tool that helps government agencies and commercial companies streamline operations, manage workflows, and provide real-time insights like no other company can. How quickly is Palantir growing? Just a year ago, its market capitalization was around $100 billion. Now it's at $430 billion and is currently the 21st-most valuable company in the world, bigger than blue-chip names like Johnson &amp; Johnson and Bank of America. The company is best known for its work with the U.S. government -- it famously came to light when its analysis helped pinpoint the location of Osama bin Laden. Palantir created a massive database that pulls information from hundreds of sources, including drones and satellites, to feed back to intelligence agencies and military commanders to help them make battlefield decisions. U.S. government contracts are the biggest piece of Palantir's revenue pie, bringing in $426 million of the company's $1 billion overall revenue in the second quarter. And more federal agencies are turning to Palantir's platform, including Homeland Security, Health and Human Services, and the State Department. U.S. government revenue was up 53% from a year ago. However, the company's opportunity with commercial businesses is just as compelling. Palantir has been hosting bootcamps to give potential customers an opportunity to learn how AIP can work specifically for their businesses. And it's working. Palantir's AIP allows new customers to start using the platform extremely quickly, and U.S. commercial revenue jumped a whopping 93% in the second quarter to $306 million. In addition, Palantir closed 157 deals in the quarter that were worth more than $1 million. Of those, 66 were worth more than $5 million and 42 were worth more than $10 million. Palantir also issued guidance for the third quarter of more than 50% growth from a year ago, and said it would be the highest sequential quarterly revenue growth in the company's history. <h2>Why valuation is a red flag</h2> Palantir skeptics -- and there are a lot of them -- point to the company's ugly valuation as a reason why the stock is doomed to sustain its run. The company has a price-to-sales ratio of 134, and a forward P/S ratio of 104. That means that Palantir has a valuation that not even Nvidia experienced during its amazing run to a $4 trillion market cap. For Palantir to achieve Nvidia's current P/S ratio of 26 at its current share price, it would have to bring in more than $17 billion in revenue over a 12-month period -- a huge leap from the $3.4 billion it currently has over the last 12 months. And it doesn't help that the P/S ratio is actually going up as the stock price increases. The P/S ratio is up nearly 30% in just the last three months. That's why skeptics say Palantir is a bad investment because it's too expensive right now -- you're buying the stock at horrendous premium. And that's why Citron Research published a report that called Palantir's stock &#34;detached from fundamentals and analysis,&#34; sending shares down 18% earlier this summer. So, is Palantir a buy here? That depends on your comfort level with numbers over momentum. Personally, I'm still liking Palantir here because I think it's a revolutionary company that is going to change how businesses operate. I think that the market doesn't recognize Palantir's true value yet, just as it didn't recognize what companies like Amazon would be. So yes, Palantir is a buy for me, purely as a momentum stock. But I also understand why its detractors are staying away. </div>

PLTR

Palantir Technologies (PLTR) has seen significant stock fluctuations, recently recovering to within 4% of its all-time highs, up 25% this year. The company, known for its AI platform, has a market cap of $430 billion, driven by strong U.S. government contracts and a 93% increase in commercial revenue. However, concerns about its high valuation persist, with a price-to-sales ratio of 134. While some analysts view it as overpriced, others see potential for growth, making it a buy for those willing to embrace its momentum despite valuation risks.

- Palantir Technologies has experienced significant stock fluctuations, recently recovering to near all-time highs despite ongoing valuation concerns.  
- The company is recognized for its Artificial Intelligence Platform, which has driven substantial growth in both government and commercial sectors, with revenue from U.S. government contracts increasing by 53% year-over-year.  
- However, skeptics highlight Palantir's high price-to-sales ratios, suggesting that the stock may be overvalued, leading to mixed opinions on its investment potential.

Is Palantir Technologies Stock a Buy Now?