Palantir Stock Audit: 25/30, but at 170x Earnings

Why look at Palantir stock now?

Palantir shares fell 7.2% on Friday, October 16, 2026. That was the stock's biggest one-day move in the last 10 sessions, and it came one week after the highest close of the past year, $209.05 on October 9. With earnings due November 2, now's a good time to check whether the business actually supports the price.

The drop landed right after a wave of Wall Street enthusiasm. Goldman Sachs upgraded the stock to Buy from Neutral on October 8, 2026, and Barclays initiated coverage at Overweight on October 9. Then Yahoo Finance ran "Stock-Split Watch: Is Palantir Next?" on October 24. So a lot of people are watching this one.

As of the close on Friday, October 23, 2026, the stock sat at $196.75. That's about 5.9% below the October 9 high and about 83% above the low close of $107.27 on June 25, 2026. Over the full year, though, the shares gained 9.0%, behind the S&P 500's 13.1%. Look at how wide that swing is on the chart.

How fast is Palantir growing?

Fast, and it's getting faster. Revenue went from $1.54 billion in 2021 to $4.48 billion in 2025, a 30.5% compound annual growth rate over four years. Growth slowed to 16.7% in 2023, then picked back up to 28.8% in 2024 and 56.2% in 2025. Trailing 12-month revenue is now $6.16 billion.

Year	Revenue	Growth	Net margin	Free cash flow
2021	$1.54B	n/a	-33.7%	$321.2M
2022	$1.91B	+23.6%	-19.6%	$183.7M
2023	$2.23B	+16.7%	9.4%	$697.1M
2024	$2.87B	+28.8%	16.1%	$1.14B
2025	$4.48B	+56.2%	36.3%	$2.10B

The path tells you more than the endpoints do. In 2023, growth dropped into the teens, which is usually where a growth story starts to fade. This one turned back up instead. And the most recent quarter grew revenue 92.8% from the same quarter a year earlier, per Yahoo Finance's summary.

The revenue chart shows that bend. Pay attention to how steep the last bar is compared with the first three.

Is Palantir actually profitable now?

Yes, and by a wide margin. Net margin went from -33.7% in 2021 to 36.3% in 2025, and the trailing 12-month figure is 49.0%. Operating margin moved from -26.7% to 31.6% over the same stretch. Gross margin rose from 78.0% to 82.4%, so each extra dollar of sales costs very little to deliver.

That's where it gets interesting. In 2025 revenue grew 56.2%, but net income grew 251.6% to $1.63 billion. Costs aren't scaling with sales, which is what operating leverage looks like in a software model. Return on invested capital is 25.6% and return on equity is 37.5%, both trailing 12 months.

The net margin chart shows the move from losses to fat profits. Look at the slope, not any single year.

How much cash does Palantir generate?

A lot. Free cash flow was $2.10 billion in 2025, or 46.9% of revenue, up from $321.2 million in 2021. Capital spending was only $33.9 million last year, so nearly all of the $2.13 billion in operating cash flow turned into free cash. For each dollar of sales, about 47 cents came back as cash.

The balance sheet is just as clean. Palantir ended 2025 with $7.18 billion in cash and short-term investments against $229.3 million of debt, a debt-to-equity ratio of 0.03. In the latest quarter, cash reached $9.41 billion against $211.4 million of debt, or about $9.20 billion net. A current ratio of 7.23 means short-term obligations aren't a worry. If you want the background on why investors trust this metric, our guide to free cash flow and why investors trust it most covers it.

What does the Stock Audit score Palantir?

Palantir scores 25/30, which earns an A grade in the "Structurally Strong" band. The audit found five strengths, three concerns and zero potential red flags. Four of the six modules score a perfect 5/5. The two that don't, valuation and capital allocation, are where the real debate is.

Module	Score
Revenue Strength	5/5
Profitability	5/5
Balance Sheet Safety	5/5
Competitive Advantage	5/5
Valuation vs Growth	3/5
Capital Allocation	2/5

The competitive advantage score rests on three signals together: high and rising gross margin, profits growing faster than sales, and a 25.6% ROIC. Compare that with our NVIDIA Stock Audit deep dive, where the score was a perfect 30/30. Palantir's business holds up just as well on quality. It loses its points on what shareholders pay and how much their stake gets diluted. You can see every finding in the full Palantir Stock Audit.

Is Palantir stock overvalued?

The price already assumes a lot. As of the close on October 23, the stock traded at 169.6x trailing earnings and 73.5x trailing sales, with a free cash flow yield of 0.7%. The audit still gives valuation a middling 3/5, because a PEG of 1.70 sits in a normal range for how fast earnings are growing.

Here's how to think about it. At a 0.7% yield, every $100 of stock buys you about 70 cents of annual free cash flow. Analysts expect earnings per share of $2.35 next fiscal year, roughly double the trailing $1.16, which brings the forward P/E down to 83.7x. That's still a premium price even if the forecast comes true. When P/E gets this stretched, our explainer on the price-to-sales ratio is a useful second lens.

Wall Street is divided. Across 26 analysts, the average target is $206.66, only 5.0% above the share price, and the range runs from $80.00 to $265.00. Nineteen analysts rate it Buy or Strong Buy, eight say Hold and three say Sell. The comparison below puts Palantir's P/E next to other large-cap tech names.

What are the bull and bear cases for Palantir?

The bull case is that the business keeps getting better: growth is speeding up, margins are widening, and it's sitting on billions in net cash. The bear case is that a 169.6x P/E leaves no room for a stumble, and the share count keeps growing about 8% a year on average while insiders are selling.

The bull case

Palantir has beaten the consensus EPS estimate four quarters in a row. The beats went from $0.21 against $0.17 in the report announced November 3, 2025, to $0.41 against $0.34 on August 3, 2026. Add growth that sped up from 28.8% to 56.2% and a net cash pile, and the numbers back the growth story.

The bear case

Dilution is the real cost. Diluted shares went from 1.92 billion in 2021 to 2.57 billion in 2025, up 33.4%. Buybacks were just $75.0 million last year, small next to $2.10 billion of free cash flow. Insiders sold $130.7 million of stock over the last six months across 48 sales, and none of them bought.

Volatility matters too. With a beta of 1.6, a -7.2% day like October 16 isn't unusual for this stock.

What would change the thesis?

Three things would weaken it: revenue growth falling well below 31% a year, net margin slipping back from 36.3%, or a share count that keeps climbing faster than per-share earnings. At this valuation, even a slight slowdown could compress the multiple while the business itself is still doing fine.

What's next for Palantir stock?

Palantir's next earnings report is scheduled for Monday, November 2, 2026, according to Yahoo Finance's earnings calendar. With four straight beats and a 169.6x P/E, a beat alone isn't the bar. The bar is whether growth holds near the 92.8% pace from the latest quarter.

Three numbers to check that day. First, revenue growth against that 92.8% figure and the 56.2% annual pace. Second, EPS against the consensus, since the streak of beats is part of what the price assumes. Third, the diluted share count against 2.57 billion, because that determines how much of the growth actually reaches each share. If you want to stress-test the growth math yourself, try the Growth Stock Calculator.

Frequently Asked Questions

What does Palantir do?

Palantir builds and deploys software platforms, mainly for the intelligence community, that support counterterrorism investigations and operations in the United States, the United Kingdom and elsewhere. One product is Palantir Gotham, which helps users find hidden patterns across different kinds of data and hand off findings from analysts to operational teams. It's classified in the Technology sector under Software - Infrastructure.

Does Palantir pay a dividend?

No. The dividend yield is 0.00%, and the company paid no dividends from 2021 through 2025. It does buy back some stock, $64.2 million in 2024 and $75.0 million in 2025, but that's small next to its free cash flow. Most of the cash it generates stays on the balance sheet, so it isn't an income stock.

How volatile is Palantir stock?

Palantir's five-year beta is 1.6, which means it has historically moved about 60% more than the overall market. Its 52-week trading range runs from $106.37 to $212.94, so the high is roughly double the low. Our guide on what beta measures explains how to factor that into position sizing.

What is a forward P/E and why is Palantir's lower?

A forward P/E divides today's share price by analysts' earnings estimate for the next fiscal year rather than trailing results. Palantir's is 83.7x, based on expected EPS of $2.35, compared with 169.6x on trailing EPS of $1.16. The gap only closes if earnings actually roughly double, so the forward figure depends on that estimate holding up.

Who owns Palantir stock?

Institutions hold about 64.6% of the shares and insiders about 3.5%. Short interest is 2.6% of the float, which is low for a stock this richly valued, so few traders are betting heavily against it. The market values the whole company at $472.80 billion, which puts it among the largest software companies by market cap.