TLDR

Palantir stock rose 11.3% in May following positive Q1 earnings that beat Wall Street expectations with 39% year-over-year revenue growth
CEO Alex Karp accompanied President Trump to Saudi Arabia, where Trump announced $600 billion in Saudi investments
The company announced new partnerships with xAI, the Joint Commission, and manufacturer Fedrigoni
Palantir trades at extremely high valuations with a P/E ratio over 570 and P/S ratio of 105, drawing comparisons to meme stocks
Despite strong fundamentals, analysts warn the stock price may be unsustainable due to retail investor speculation

Palantir Technologies Inc. saw its stock climb 11.3% in May as the data analytics company delivered strong earnings results and secured high-profile partnerships. The gains came as CEO Alex Karp joined President Trump on a trip to Saudi Arabia.

The company reported first-quarter earnings per share of $0.13 on revenue of $884 million. Revenue jumped 39% year-over-year, beating Wall Street forecasts. However, global sales declined 10% during the same period, raising questions about international growth.

Karp’s presence on Trump’s Saudi Arabia trip could prove crucial for international expansion. The trip concluded with Trump announcing that Saudi Arabia committed to $600 billion in investments. While specifics remain unclear, some of this funding may flow to Palantir’s operations.

The timing of the Saudi trip was particularly strategic given Palantir’s international sales decline. The company needs to reverse this trend to maintain its growth trajectory. Saudi investment could provide the international boost Palantir requires.

Palantir Technologies Inc. (PLTR)

Palantir also announced partnerships with xAI, the Joint Commission, and manufacturer Fedrigoni during May. These deals showcase the versatility of Palantir’s technology across different sectors. The partnerships will focus on boosting efficiency and reshaping business practices.

The range of organizations partnering with Palantir demonstrates the adaptability of its platform. From healthcare to manufacturing, the company continues to find new applications for its data analytics tools.

Meme Stock Comparisons Surface

Despite strong fundamentals, Palantir faces growing comparisons to meme stocks due to its extreme valuation. The stock trades at over 570 times earnings and 105 times sales. These multiples far exceed historical norms for even the fastest-growing tech companies.

When Nvidia experienced peak growth in 2024, its valuation ratios were roughly half of Palantir’s current levels. Even Cisco at its dot-com peak in 2000 only reached about half of Palantir’s current valuation. This comparison raises red flags about sustainability.

Interactive Brokers data shows Palantir among the most active stocks by client orders. This indicates heavy retail investor interest, similar to meme stock patterns. Retail traders appear increasingly comfortable with high-risk, high-beta plays in the AI space.

CoreWeave, another AI-related stock, has experienced similar retail-driven gains. Both companies benefit from strong AI demand, but their valuations may not reflect realistic growth expectations. The risk is a sharp correction when sentiment shifts.

Vanda Research notes that retail traders are venturing into more speculative AI-themed investments. Sentiment remains overwhelmingly positive for stocks with recent momentum or AI exposure. This creates a feedback loop that can drive prices beyond fundamental value.

Valuation Reality Check

Palantir’s price-to-sales ratio of 71 times estimated revenue makes it the most expensive stock in the S&P 500. CoreWeave trades at 10 times projected sales despite posting a $315 million net loss in Q1. The S&P 500 average sits around 3 times sales.

Previous AI trades have shown how quickly sentiment can reverse. Super Micro Computer quadrupled before losing over 80% of its value due to accounting issues. BigBear.ai and SoundHound AI also experienced sharp rallies followed by steep declines.

Gene Munster from Deepwater Asset Management warns that meme investing has returned to the market. He considers stocks like CoreWeave too overvalued for institutional investors. The concern is that retail speculation is driving prices beyond reasonable levels.

Steve Sosnick from Interactive Brokers notes that investors are ignoring fundamentals to chase trends. When the rubber band stretches too far, the snapback can be substantial. Fresh money is needed to sustain these moves, making them vulnerable to reversals.

Despite the valuation concerns, Palantir continues to win government contracts under the Trump administration. The company’s revenue is projected to grow 36% this year, supported by strong AI product sales. These fundamentals provide some support for the stock price.

Palantir reported Q1 2025 earnings with revenue growth of 39% year-over-year, though international sales declined 10% during the quarter.

The post Palantir (PLTR) Stock: From Saudi Billions to Meme Stock Warning appeared first on CoinCentral.

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Filed under: News - @ June 11, 2025 9:27 am