Palantir is too overhyped?
Palantir Technologies recently reported strong Q2 earnings, showcasing their dominance as a leading AI software company. Despite widespread recession fears, Palantir reported a 27% year-over-year revenue growth, with net income rising to $134 million from $28 million the previous year. Their operating margin also improved significantly, growing from 2% to 15.5% in Q2. All of this good news has seemingly enpowered bulls but they are disconnected from reality.
Palantir's valuation raises concerns, as it currently trades at a high price-to-sales ratio of 29x, making it one of the most expensive tech companies in the U.S. market. For reference most companies that trade over 20x sales will return -30% over the next 10 years. Our aggressive DCF suggests that, under even the most optimistic growth assumptions leave Palantir overvalued.