Palantir Technologies, a data analytics company, has been experiencing substantial growth, with a projected growth rate of 20% for the current year. Despite being profitable, the company’s low margins indicate that it may not be a cheap buy in terms of earnings. With its stock trading near 52-week highs and concerns about a possible bubble in AI stocks, investors are contemplating whether to buy now or wait for a potential dip.

Shares of Palantir Technologies have surged approximately 40% this year, driven by strong earnings and a promising outlook, particularly in the field of artificial intelligence (AI). However, the company’s growth trajectory has sparked apprehensions about a potential bubble in the AI sector, prompting investors to consider delaying their investment in the stock.

When evaluating Palantir’s valuation in comparison to other fast-growing AI stocks, it becomes evident that investors typically pay a premium for shares of such companies. Given Palantir’s recent profitability and positive net income for five consecutive quarters, its forward price-to-earnings (P/E) multiple suggests that investors are willing to pay a high premium for anticipated future growth. However, this approach carries inherent risks if expectations fail to materialize.