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Palantir (NASDAQ: PLTR) inventory could possibly be about to surge once more. That’s as a result of the factitious intelligence (AI) software program firm simply posted its fourth-quarter 2025 earnings and the numbers had been actually unimaginable.
Is it time to purchase this US progress inventory for my ISA? Let’s talk about.
Unbelievable numbers for This autumn
I believed Palantir’s This autumn outcomes could be good. However I didn’t suppose they’d be this good.
For the quarter, income was up an enormous 70% 12 months on 12 months to $1.4bn. In the meantime, US income was up an insane 93% to $1.1bn.
Driving this progress was US industrial income. This got here in at $507bn, up 137%, signalling that US companies are scrambling to undertake its AI know-how.
Nevertheless, US authorities income (defence and nationwide safety) was additionally very sturdy. This was up 66% to $570m.
It wasn’t nearly income although. Income additionally soared.
For the interval, web earnings attributable to frequent stockholders was $609m. That determine was up round 670% 12 months on 12 months.
As for the software program firm’s ‘Rule of 40’ rating (income progress plus working margin), this was 127. That’s mainly unparalleled.
Wanting forward, administration stated that it’s aiming for income progress of 61% this 12 months (the consensus forecast was about 40% progress). In different phrases, the corporate is anticipating 2026 to be one other blockbuster 12 months.
Alex Karp gems
Within the firm’s letter to shareholders, CEO Alex Karp did his normal factor. “Our financial results, those crude and imperfect metrics by which a market filled with both excitement and fear attempts to assess the value of the companies it covets, have again exceeded even our most ambitious expectations,” he wrote.
“We are at the outset, the very beginning, of a generational project,” he famous. So, he clearly sees a whole lot of progress potential forward.
Ought to I purchase now?
Now, whereas that is all super-exciting, the valuation right here stays very excessive. At the moment, Palantir has a market cap of round $390bn.
Provided that the corporate is forecasting income of about $7.2bn this 12 months, the price-to-sales ratio (word I’m speaking about price-to-sales not price-to-earnings) is roughly 54. That’s a little bit of a turn-off for me (it’s one of many highest price-to-sales ratios within the S&P 500 index).
At that gross sales a number of, there’s no room for a slowdown. If progress was to out of the blue reasonable for some purpose, the share value may drop considerably.
It’s value noting that famed brief vendor Michael Burry has been focusing on this inventory lately. He clearly sees it as overvalued.
It’s additionally value fascinated by a possible downturn in AI shares. This space of the market has seen some weak point lately and we will’t rule out one other leg down.
One different concern on my thoughts is Palantir’s involvement with ICE (United States Immigration and Customs Enforcement). Palantir has stated that there’s no malicious intent with its work with the US authorities. Nevertheless, not everyone seems to be satisfied.
Contemplating these points, I’m going to maintain the inventory on my watchlist for now. I could possibly be involved in shopping for it someday, however I’m not prepared to purchase simply but.
