Can Palantir’s Explosive 2025 Rally Be Justified By Its Cash Flow Outlook?

• If you are wondering whether Palantir Technologies is still a smart buy after its huge run, or if most of the upside is already priced in, you are not alone.
• The stock has climbed 1.0% over the last week, 5.5% over the past month, and an eye catching 144.1% year to date, with a 141.3% gain over the last year and an extraordinary 2560.4% rise over three years, putting it firmly on growth investors’ radar.
• Recently, Palantir has stayed in the spotlight as governments and large enterprises deepen their adoption of AI driven data analytics platforms and as the company expands high profile partnerships across defense, healthcare, and commercial sectors. These developments help explain why some investors see durable demand ahead, even as others worry that expectations might be running too hot.
• Despite that excitement, Palantir currently scores just 0/6 on our valuation checks, which means it does not screen as undervalued on any of our standard metrics. Next, we will walk through different valuation approaches and then finish with a more holistic way to think about what the market might really be pricing in.

Palantir Technologies scores just 0/6 on our valuation checks. See what other red flags we found in the full valuation breakdown.

Approach 1: Palantir Technologies Discounted Cash Flow (DCF) Analysis

A Discounted Cash Flow model estimates what a business is worth today by projecting the cash it could generate in the future and discounting those cash flows back to their value in the present.

For Palantir Technologies, the latest twelve month Free Cash Flow is about $1.8 billion. Analysts and model estimates see this rising steadily, with projected Free Cash Flow reaching roughly $7.0 billion by 2029 and continuing to grow toward around $13.8 billion by 2035. These projections combine analyst forecasts for the next few years and then extrapolations by Simply Wall St for the later years, all within a 2 Stage Free Cash Flow to Equity framework.

When these future cash flows are discounted back to today, the model arrives at an intrinsic value of about $72.91 per share. Compared to the current market price, this implies the stock is roughly 151.8% overvalued, suggesting investors are paying well above what the cash flow outlook justifies right now.

Result: OVERVALUED

Our Discounted Cash Flow (DCF) analysis suggests Palantir Technologies may be overvalued by 151.8%. Discover 908 undervalued stocks or create your own screener to find better value opportunities.

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Palantir Technologies.

Approach 2: Palantir Technologies Price vs Book

For profitable, established software businesses, the price to book ratio is a useful way to see how aggressively the market is valuing the company relative to the net assets supporting its operations. Investors typically pay higher multiples when they expect faster growth and lower risk, and lower multiples when growth is modest or the business model is more uncertain.

Palantir currently trades at about 66.4x book value, which is far richer than both the Software industry average of around 3.5x and even its high growth peer group average of roughly 45.1x. On these simple comparisons, the stock looks very expensive.

Simply Wall St also uses a proprietary “Fair Ratio” for the preferred multiple, which estimates what a reasonable price to book might be after accounting for Palantir’s specific earnings growth profile, profitability, risk factors, industry, and market cap. This is more informative than a blunt peer or industry comparison because it adjusts for how unique Palantir’s growth and risk mix really is.

In this framework, Palantir’s current 66.4x price to book sits well above the Fair Ratio estimate, pointing to a valuation that remains stretched even after factoring in its strong growth prospects.

Result: OVERVALUED

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Upgrade Your Decision Making: Choose your Palantir Technologies Narrative

Earlier we mentioned that there is an even better way to understand valuation, so let us introduce you to Narratives, a simple way to connect your view of Palantir’s story with the numbers behind its future.

A Narrative is your own investment storyline for a company, where you spell out what you believe about its growth, margins, and competitive edge, then tie that directly to a financial forecast and an estimate of fair value.

On Simply Wall St, Narratives are an easy, accessible tool in the Community page that help you turn those beliefs into concrete assumptions for revenue, earnings, and margins, so you can see how they translate into a fair value estimate you can compare with today’s share price.

Because Narratives update dynamically when new information like earnings releases or major news drops, they give you a living framework for deciding when Palantir might be a buy, a hold, or a sell as the gap between Fair Value and Price widens or closes.

For example, some Palantir investors on the platform expect explosive growth and assign fair values well above $150 per share, while more cautious investors use slower growth and lower margins that yield fair values closer to $65.

Do you think there's more to the story for Palantir Technologies? Head over to our Community to see what others are saying!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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