Palantir (NASDAQ: PLTR) stock could be about to surge again. That’s because the artificial intelligence (AI) software company just posted its fourth-quarter 2025 earnings and the numbers were truly incredible.
Is it time to buy this US growth stock for my ISA? Let’s discuss.
Unbelievable numbers for Q4
I thought Palantir’s Q4 results would be good. But I didn’t think they’d be this good.
For the quarter, revenue was up a huge 70% year on year to $1.4bn. Meanwhile, US revenue was up an insane 93% to $1.1bn.
Driving this growth was US commercial revenue. This came in at $507bn, up 137%, signalling that US businesses are scrambling to adopt its AI technology.
However, US government revenue (defence and national security) was also very strong. This was up 66% to $570m.
It wasn’t just about revenue though. Profits also soared.
For the period, net income attributable to common stockholders was $609m. That figure was up around 670% year on year.
As for the software company’s ‘Rule of 40’ score (revenue growth plus operating margin), this was 127. That’s basically unheard of.
Looking ahead, management said that it’s aiming for revenue growth of 61% this year (the consensus forecast was about 40% growth). In other words, the company is expecting 2026 to be another blockbuster year.
Alex Karp gems
In the company’s letter to shareholders, CEO Alex Karp did his usual thing. “Our financial results, those crude and imperfect metrics by which a market filled with both excitement and fear attempts to assess the value of the companies it covets, have again exceeded even our most ambitious expectations,” he wrote.
“We are at the outset, the very beginning, of a generational project,” he noted. So, he clearly sees a lot of growth potential ahead.
Should I buy now?
Now, while this is all super-exciting, the valuation here remains very high. Currently, Palantir has a market cap of around $390bn.
Given that the company is forecasting revenue of about $7.2bn this year, the price-to-sales ratio (note I’m talking about price-to-sales not price-to-earnings) is approximately 54. That’s a bit of a turn-off for me (it’s one of the highest price-to-sales ratios in the S&P 500 index).
At that sales multiple, there’s no room for a slowdown. If growth was to suddenly moderate for some reason, the share price could drop significantly.
It’s worth noting that famed short seller Michael Burry has been targeting this stock recently. He obviously sees it as overvalued.
It’s also worth thinking about a potential downturn in AI stocks. This area of the market has seen some weakness recently and we can’t rule out another leg down.
One other issue on my mind is Palantir’s involvement with ICE (United States Immigration and Customs Enforcement). Palantir has said that there’s no malicious intent with its work with the US government. However, not everyone is convinced.
Considering these issues, I’m going to keep the stock on my watchlist for now. I could be interested in buying it one day, but I’m not ready to buy just yet.
