I recently bought Palantir stock when it was less than 35% below its high

Artificial intelligence stock Palantir (NASDAQ: PLTR) has been on my watch list for years now. I never bought it though because of its high value.

With the stock down more than 35% from its high, however, valuations have fallen slightly. So, I decided it was finally time to pull the trigger and get on the Palantir bandwagon.

A true beneficiary of AI

Palantir’s incredible growth was the main factor behind my decision to invest. This is a tech company that is benefiting from the AI ​​revolution in a big way.

Just look at the latest Q4 results. Quarterly:

• Revenue increased 70% year-on-year to $1.4bn
• US revenue increased 93% to $1.1bn
• US commercial revenue increased 137% to $507bn

I can’t remember the last time I saw a stable company grow its top line by 70% year over year. That is very unusual.

Note that by 2026, the company expects revenue growth of 61%. That makes sense.

However, it’s not just a matter of the top line here. Profits are also increasing.

In the fourth quarter, net income attributable to common shareholders increased 670% year-on-year to $609m. Meanwhile, the company’s ‘Rule of 40’ score (revenue growth and operating margin) was 127 (again, almost unheard of).

These results suggest we have a very different company here. This is not your average software company.

“Our customers are experimenting with AI slowly. They are committing to it at a high level, Palantir is driving it.”
Ryan Taylor, Palantir’s Chief Revenue Officer and Chief Legal Officer

Benefits call for understanding

Reading the transcript of the Q4 call, there was one part that jumped out at me. It was a quote from a construction company manager who said: “We’ve gone so far that all other software has to justify its existence, and so far they haven’t been able to. Ontology is a secret weapon. Nothing else comes close. And it’s not just about eliminating third-party software; we’ve changed their functionality and introduced new features, all within a year, because of ontology.“

Obviously, this is only one company’s answer. But it does suggest that Palantir has a strong product.

Palantir’s ‘ontology’ is essentially the translation of data into understandable concepts. It allows users (humans and AI agents) to make decisions directly within the platform.

A little shopping for me

Now, I will point out that my stock purchases were very small. Currently, Palantir is one of the smallest holdings in my portfolio.

I started with a small position for several reasons. Another is that the stock is falling – the downtrend may have continued performance.

Another is that the stock is still priced at a very high growth rate (price-to-earnings (P/E) ratio is around 100). However, there is no guarantee that strong growth will continue.

I see a lot of potential over time, though. I plan to continue buying the stock on weak share prices and build my position over time.