Conviction Investment Series: Palantir Technologies (August 1, 2025)

For I am not ashamed of the gospel of Christ, for it is the power of God to salvation for everyone who believes, for the Jew first and also for the Greek.

Romans 1:16

According to the Bible, there are two types of people, Jews and Gentiles. The Jews represent God’s chosen people, but the Lord chose Israel not because they were better, but rather, because of their stubbornness that would allow an opportunity for all people to receive the Gospel message of Jesus Christ. Jesus last words before He ascended to Heaven were to proclaim the Gospel to all, and this was announced to the Jews first, and since has been proclaimed to all the world throughout history.

God’s word is truth and as the Bible verse says, is powerful as it changes lives for eternity. Is there truth and proclamation when it comes to investing and the stock market? Not ultimately, but in some ways there are seeming truths such as most billionaires are long-term holders of stock rather than day traders; the stock market will always be dictated by momentum and bull/bear market cycles; and Wallstreet will always play their game which prioritizes short-term trading.

I have begun a conviction series on Palantir Technologies, Inc. (PLTR). My conviction is based upon a dichotomy of PLTR’s potential, versus its overvaluation. This series is meant to generate a dialogue regarding how to consider investing in PLTR during its current state of excessive overvaluation. The first two blogs to this series can be found here and here. The next part of this series is:

Financial Modeling: Getting Ahead Of Wallstreet & What It Means

It is important to get ahead of Wallstreet to clearly see the flawed logic for PLTR’s current stock price level. The financial model graphic below illustrates the most important point to the bull growth thesis. Even with continued increases in PLTR’s bookings or deal value, revenue is not going to double over the short-term, or likely ever for that matter. This is not a critique that should make any long-term investor owning PLTR worried. In fact, most of today’s largest companies in the world ala Big Tech never witnessed a doubling of revenue, aside from NVIDIA Corp. (NVDA).

PLTR is expected to generate a little over $4 billion in revenue for 2025 and see this grow towards $13 billion by 2029 based on my model. Today, PLTR trades with an enterprise value of nearly $360 billion or 28 times this 2029 revenue estimate, and nearly 67 times projected OCF/Share. These levels suggest a risk of ‘dead money’ playing out if PLTR’s stock price doesn’t correct at some point as the valuation multiple will contract over time.

Even over the next decade if PLTR were to generate $30 billion in revenue, the stock price today still affords a 12 times EV/Sales multiple and assuming a 50% OCF margin, a per share multiple near 30 times. Any company growing revenue from less than $3 billion to $30 billion in 10 years is an amazing story, but investors cannot become blinded by the hype based on today’s disconnect with PLTR’s fundamental valuation. PLTR is arguably the most overvalued stock in the U.S. stock market.

Today, momentum has clouded consideration, and as such, it’s helpful to put things into greater context.

NVDA is truly an exceptionally rare case in investment history where a company increases revenue from less than $11 billion in 2020 to the current $200 billion estimate for FY 2026 reflecting a 60% annualized return over six years.

From 2023, the company’s revenue has doubled twice, and this is the primary reason that the extreme overvaluation in 2022 based on stock price, has become inverse to NVDA’s stock price performance today. Inversion alone does not equate to more reasonable valuation, but it is an important step for long-term aggressive growth companies to outperform market peers.

The rate of revenue growth and operating cash flow inflection or maintained margin level is the key driver for stock price performance. In the short-term, ‘exuberance’ is what generates interest and subsequent momentum, or in today’s market, the ‘fear of missing out’ or FOMO. Today’s FOMO is reflective of a popularity contest with PLTR where nearly everyone has jumped in. But over the long-term, the market serves as a weighing machine and all companies mature into a reasonable valuation level irrespective of any premium; PLTR will not avoid this path.

PLTR remains a success story based on its fundamental company performance, but investors should not mistake company fundamentals with fundamental valuation. To appease persistent animal spirits, I’ve placed a very extreme targeted valuation level and as can be seen, PLTR’s stock price has defied trading anywhere close to this level the past seven months.

So, the question is, can the company’s revenue accelerate substantially beyond a financial model that is well above Wallstreet’s averages, and concurrently sustain a 50% operating cash margin. Of course anything can happen, but if investors believe that it can scale even faster, then like NVDA, there should be a point where PLTR’s OCF multiple inverts substantially below the company’s stock price. As stated, this can only occur if PLTR can begin doubling its revenue consecutively like NVDA, while maintaining its current cash flow margin and even expanding it further over time.

The earnings report is coming this Monday and if PLTR indeed exceeds expectations to a high enough level, the stock price could very well jump to the $200 level – as Jim Cramer has speculated. Today's investors have witnessed PLTR's stock price generating nearly a decade's worth of performance in less than two years. These levels require a cautious stance moving forward, as each trek higher simply increases the degree of contraction once the air for this bubble runs out.