Palantir's Valuation Reassessed: One Chart Challenges Perceived Premium

Palantir Technologies Inc. (PLTR) has seen renewed investor interest as a key chart challenges the narrative that its stock is overvalued. Despite trading at a premium multiple compared to peers, the chart highlights a sharp acceleration in revenue growth and contract wins, particularly in defense and intelligence sectors. Data shows PLTR’s revenue increased 47% year-over-year in Q3 2025, reaching $920 million, with government and defense clients contributing 62% of total bookings. This marks a 22% rise in government contract value from the prior quarter, underscoring expanding federal demand for its AI-driven data platforms. The chart in question plots PLTR’s price-to-sales ratio against its revenue growth rate over the past three years. While the stock’s P/S ratio sits at 17.4 as of December 2025—well above the technology sector average of 6.8—it shows a sustained upward trend in revenue that has outpaced valuation increases. This divergence suggests the market may be underpricing future growth potential, especially as Palantir integrates generative AI into its Gotham and Foundry platforms. Investors and analysts are now reassessing the stock’s long-term prospects. The recent surge in government spending on AI infrastructure, including a $2.3 billion Department of Defense contract awarded in November 2025, has bolstered confidence in Palantir’s recurring revenue model. The company’s enterprise customer base grew to 1,140 in Q3, up 18% from the previous year, with 37% of new customers coming from the public sector. Market impact is already evident, with PLTR shares rising 8.3% in the two days following the chart's appearance in financial commentary. The stock’s momentum is drawing attention from institutional investors and ETF managers, some of whom have increased exposure in recent weeks. Short interest remains elevated at 12.5% of float, indicating ongoing skepticism, but the data may be shifting the balance toward conviction.