Palantir Stock Is Near Its Record. Here's the Price at Which I'd Buy It.

Palantir reported $1.17 in trailing-12-month EPS, nearly four times the $0.30 earned in the prior four quarters, while Q2 revenue rose 93% year over year. At about $198 per share, the stock trades at roughly 170 times trailing earnings; the author says a $140 price, equivalent to about 120 times earnings, would be a buying level. Holding quarterly EPS at $0.41 for three more reports could lift trailing EPS to about $1.64 and put the stock near $197 at that 120-times multiple, though slowing EPS growth and a potentially higher tax rate are risks.

Analysis

The key risk is duration, not whether Palantir is executing: a high-growth, long-duration equity can fall materially even while earnings rise if investors require a lower multiple. Treating the stock’s prior-year trough multiple as a fair-value anchor is weak—the rate backdrop, risk appetite, and earnings base can all change, so that historical multiple is not a floor. The earnings run-rate also needs quality checks: the unusually light tax burden may not persist, and investors should compare GAAP earnings, adjusted operating guidance, cash conversion, and share dilution rather than assume they move together.

Over the next few weeks, momentum and continued AI demand can keep the valuation supported; an outright short has meaningful squeeze risk. Over 1–3 months, the test is whether growth, margins, and customer commitments sustain the trajectory implied by the price. Over 6–18 months, the competitive risk is that large cloud and software platforms bundle AI capabilities, pressuring standalone pricing or slowing deployments. Conversely, demonstrable customer expansion and durable cash generation would justify a richer multiple than a historical trough. The contrarian point: a strong business can still be a poor entry if expectations leave little room for execution variance.

Key Decisions for Investors

• Do not chase strength; keep PLTR underweight versus a broad software benchmark unless the next reports confirm durable growth and cash conversion. The historical trough multiple alone is not a buy signal.
• For a relative-value expression, consider a beta-adjusted short PLTR / long diversified software basket, sized modestly and reviewed around earnings. This targets multiple-duration risk while reducing broad software exposure; it can lose if Palantir’s growth materially outpaces peers.
• Before adding or covering, verify the GAAP-to-adjusted earnings bridge, normalized tax rate, share-based compensation and dilution, operating cash flow, and customer or contract-growth indicators. These are the missing checks behind the headline EPS acceleration.
• Falsify the cautious thesis if subsequent results sustain strong customer expansion and margins while cash generation keeps pace with reported earnings. Strengthen it if guidance or bookings weaken, tax normalization materially slows per-share growth, or the market reprices long-duration software lower.