This Tech Stock Has Outperformed the Nasdaq 3 Years Running, but Is Down 25% in 2026. Is Now the Time to Buy?

Over the anterior 3 years, Palantir Technologies (NASDAQ: PLTR) was 1 of the hottest stocks, with triple-digit gains successful 2023 (167%), 2024 (340%), and 2025 (135%). However, 2026 has not been arsenic benignant to the stock, arsenic it's down much than 25% arsenic of May 13.

The stock's performance, though, is surely not reflective of however the institution has been performing operationally. Instead, it is much a effect of the institution getting caught up successful the software-as-a-service (SaaS) banal sell-off and a precocious valuation. From an operational standpoint, Palantir continues to deed it retired of the park.

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This was evident successful its Q1 2026 results, arsenic Palantir saw gross maturation accelerate for the 11th consecutive quarter. Its wide gross maturation surged 85%, led by 133% maturation among U.S. commercialized customers and 84% maturation among U.S. authorities customers.

While the institution continues to adhd caller customers astatine a brisk pace, with its U.S. lawsuit number up 42%, possibly the astir awesome metric from its Q1 study was that its nett dollar retention was 150%. This means that aft a year, its existing lawsuit basal is expanding rapidly.

This speaks volumes to Palantir's presumption wrong the artificial quality (AI) ecosystem. The company's Artificial Intelligence Platform (AIP) has go indispensable successful helping marque AI utile successful the existent world.

Rather than focusing connected creating the adjacent large ample connection exemplary (LLM), Palantir alternatively played to its spot successful information gathering and analytics. Its level tin stitchery information from disparate sources wrong an enactment and past necktie it into an ontology that links that information with its real-life counterparts, whether that beryllium carnal assets, processes, oregon concepts. This fundamentally makes AIP similar an AI operating strategy that helps enactment arsenic a root of information and importantly reduces costly AI hallucinations.

Is the banal a buy?

Despite the stock's diminution this twelvemonth and the company's accelerated growth, Palantir's shares are inactive not precisely successful the bargain bin. The banal trades astatine a guardant price-to-sales (P/S) ratio of 40.5 times 2026 expert estimates, and based connected 2027 estimates, it drops to a 28 times multiple.

While those are inactive immoderate hefty valuation metrics, fixed its bonzer gross maturation and the presumption its level has embedded itself successful the AI landscape, determination is surely crushed to judge that Palantir could not lone turn into its valuation but 1 time go 1 of the astir invaluable companies successful the world.