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Palantir (NASDAQ: PLTR) inventory may very well be about to surge once more. Thatโs as a result of the synthetic intelligence (AI) software program firm simply posted its fourth-quarter 2025 earnings and the numbers have been actually unimaginable.
Is it time to purchase this US progress inventory for my ISA? Letโs focus on.
Unbelievable numbers for This fall
I assumed Palantirโs This fall outcomes could be good. However I didnโt suppose theyโd 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 business income. This got here in at $507bn, up 137%, signalling that US companies are scrambling to undertake its AI expertise.
Nonetheless, US authorities income (defence and nationwide safety) was additionally very sturdy. This was up 66% to $570m.
It wasnโt nearly income although. Income additionally soared.
For the interval, web earnings attributable to widespread stockholders was $609m. That determine was up round 670% 12 months on 12 months.
As for the software program firmโs โRule of 40โ rating (income progress plus working margin), this was 127. Thatโs principally extraordinary.
Wanting forward, administration mentioned that itโs 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 firmโs letter to shareholders, CEO Alex Karp did his normal factor. โOur monetary outcomes, these crude and imperfect metrics by which a market stuffed with each pleasure and concern makes an attempt to evaluate the worth of the businesses it covets, have once more exceeded even our most bold expectations,โ he wrote.
โWe’re on the outset, the very starting, of a generational venture,โ he famous. So, he clearly sees a number of progress potential forward.
Ought to I purchase now?
Now, whereas that is all super-exciting, the valuation right here stays very excessive. At present, Palantir has a market cap of round $390bn.
On condition that the corporate is forecasting income of about $7.2bn this 12 months, the price-to-sales ratio (word Iโm speaking about price-to-sales not price-to-earnings) is roughly 54. Thatโs a little bit of a turn-off for me (itโs one of many highest price-to-sales ratios within the S&P 500 index).
At that gross sales a number of, thereโs no room for a slowdown. If progress was to all of the sudden reasonable for some purpose, the share value may drop considerably.
Itโs price noting that famed quick vendor Michael Burry has been concentrating on this inventory lately. He clearly sees it as overvalued.
Itโs additionally price desirous about a possible downturn in AI shares. This space of the market has seen some weak spot lately and we willโt rule out one other leg down.
One different concern on my thoughts is Palantirโs involvement with ICE (United States Immigration and Customs Enforcement). Palantir has mentioned that thereโs no malicious intent with its work with the US authorities. Nonetheless, not everyone seems to be satisfied.
Contemplating these points, Iโm going to maintain the inventory on my watchlist for now. I may very well be enthusiastic about shopping for it at some point, however Iโm not prepared to purchase simply but.
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