Palantir Stock’s P/E Ratio Is 202, Its Revenue Just Grew 70%. The Market Can’t Decide What to Do With That

Inside a structure in Denver that resembles a tech campus rather than the headquarters of a defense contractor, Alex Karp is in charge of a business that the financial community has been debating for years without ever coming to a definitive conclusion. Palantir Technologies has been referred to as everything from the most significant software company in America to a story stock based on government connections and hype. The reality is most likely somewhere in the middle, and the last few weeks of trading have condensed all of that discussion into a single tumultuous week: a 14% drop, a presidential Truth Social post praising the company by ticker symbol, Michael Burry publicly referring to it as a bubble, Cathie Wood purchasing shares worth $11 million, and analysts with price targets ranging from somewhere between $50 and $230.

When all the noise is removed, the core business is truly impressive. Palantir reported a 70% year-over-year increase in revenue in Q4 2025, the highest growth rate since going public in 2020. Revenue in the US increased by 93%.

The sector that doubters have long questioned, U.S. commercial revenue, increased 137% annually. The company’s Rule of 40 score, which combines profit margin and revenue growth into a single figure and is deemed excellent if it is greater than 40, was 127%. For comparison, the majority of enterprise software firms are happy to reach 50. Palantir scored 127. In 2026, the company aimed for a 61% increase in revenue. These are not the figures of a failing company. These figures are among the best in business software.

However, as of mid-April 2026, the stock is down about 28% year to date, trading at about $128 after hitting $207 at its 52-week high in November of last year. The obvious source of conflict is the valuation. A quarterly earnings beat does not explain a P/E ratio of 202. The market must believe that Palantir’s AI platform will become truly indispensable in both government and commercial markets, that it will compound earnings at an exceptional rate for years, and that no significant competitor will undermine its position before the valuation has an opportunity to grow into itself. Since last fall, Michael Burry has been using put options to publicly debate each of those assumptions.

Burry’s argument, which was outlined in a post on X that was later removed but was extensively cited before it vanished, basically contends that Anthropic’s new AI tools are capturing enterprise spending that would have otherwise gone to Palantir, that government contracts—Palantir’s most reliable source of income—are intrinsically lower margin and more difficult to grow quickly, and that the stock’s current multiple assumes a dominance the company hasn’t yet established and may not be able to defend. He says his fair value is less than fifty dollars. That number is controversial. Daniel Ives, a Wedbush analyst, referred to the thesis as fictional and kept his Buy rating with a $230 target, citing the acceleration of commercial revenue as evidence of Palantir’s continued competitiveness. The same earnings reports are being viewed by both men. Their conclusions vary by $180 per share.

Unusual for a software company, the government business adds complexity to the picture. The Pentagon, ICE, and other government organizations provide more than half of Palantir’s revenue in the United States. As part of ongoing U.S.-Israeli operations against Iran, targets in the Middle East are allegedly being identified using Palantir’s AI-powered military intelligence platform, Maven Smart System.

That isn’t a common use case for software. It produces a company with both unusual political exposure and unusual revenue stability because government contracts are difficult to cancel. Palantir’s relationship with the AI lab became complicated after the Department of Defense blacklisted Anthropic. CEO Alex Karp stated that the company would phase out Anthropic’s models, but that transition hasn’t been finished. There is conflict that wouldn’t arise in a more typical software company due to the overlap between Palantir’s clients and the businesses it collaborates with.

In the history of public markets, nothing like President Trump’s Truth Social post on April 10th, which praised Palantir’s “war fighting capabilities” and called it out by ticker symbol, has ever occurred. It is truly unprecedented for a sitting U.S. president to publicly support a particular stock by ticker. Shares recovered from their lows as a result of the intraday effect. The stock was still down 1.86% for the day at close. The market took about six hours to process the presidential endorsement before returning to its preexisting belief that a 202x earnings multiple needs more than just a Truth Social post to support it.

In a way, the best way to describe the current state of this stock is Cathie Wood’s choice to switch $11 million from AMD to Palantir during the same week Burry was openly shorting it. When two knowledgeable investors with actual track records examine the same business, they come to different conclusions. Value investors are not satisfied with Palantir’s current price because it is not profitable enough. Growth investors are excited by how quickly it is expanding. Additionally, it is so ingrained in both commercial and military AI that it is becoming more and more challenging for anyone building a portfolio around the future of enterprise software to ignore it. As of mid-April 2026, it is still genuinely unclear whether the valuation eventually grows into the price or the price eventually grows into the valuation.