UK investors are buying the dip in Palantir stock. Should I buy too?

Palantir (NASDAQ: PLTR) stock experienced a sharp pullback after the company posted its earnings for the third quarter of 2025 on Monday night (3 November) and UK investors have been aggressively buying the dip. Looking at data from AJ Bell, itâs the most bought stock on the platform over the last day.

Now, Iâve had this artificial intelligence (AI) stock on my watchlist for ages but Iâve never actually pulled the trigger and bought it for my portfolio. Should I follow the crowd and buy it now? Letâs discuss.

Unbelievable Q3 earnings

Palantirâs Q3 results were truly unbelievable. For the quarter, revenue was up an incredible 63% year on year to $1.18bn. Adjusted earnings per share (EPS) was $0.21, more than double the figure in Q3 2024. Meanwhile, the companyâs ârule of 40â score (revenue growth plus profit margin) was 114 â thatâs literally unheard of.

Driving this mind-blowing growth was the companyâs US commercial segment. Here, revenue was up 121% year on year to $397m, signalling that US businesses are scrambling to adopt Palantirâs AI technology. US government revenue growth remained strong however, at 52%.

âThese are arguably the best results that any software company has ever delivered.â
Palantir CEO Alex Karp

Just getting started

Looking at these numbers, one thing’s very clear. This company is the real deal when it comes to AI. I was impressed with its growth rate last quarter, which was 48%. The fact that this has accelerated to 63% suggests that the company has AI solutions that are truly best in class.

Whatâs interesting is that in the quarterly letter to shareholders, its CEO said that the company is just getting started.

I think he may be right because of the $1.18bn in revenue for Q3, $883m came from the US. In other words, there could still be huge potential in Europe, Asia, and other areas of the world.

Does the stock look attractive?

So we have a brilliant company here. But a brilliant company doesn’t always translate to a winning investment so what does the stock look like? Well, this is where things get complex.

You see, Palantir has an insanely high valuation today (even after its pullback). At present, it trades on a forward-looking price-to-earnings (P/E) ratio of 209 and a forward-looking price-to-sales ratio of about 58 (these figures use sales and earnings estimates for 2026).

These valuations add a ton of risk to the investment case because theyâre so high. For reference, Nvidia trades on multiples of about 30 and 13 right now.

Note that a lot of professional analysts have problems with the valuation. On Wall Street, several firms have price targets below $70. Personally, Iâd be willing to pay a premium for this company because of its growth. But I canât justify a price-to-sales ratio of 58.

That kind of ratio assumes that growth will keep ticking along at current rates for years. And I think thatâs unlikely (although it could happen).

My move now

Given the sky-high valuation, Iâm going to leave Palantir on my watchlist for now. Iâm keen to buy it for my portfolio, but I think Iâll get better opportunities in the months ahead.

The post UK investors are buying the dip in Palantir stock. Should I buy too? appeared first on The Motley Fool UK.

Should you invest Â£1,000 in Palantir Technologies right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets.

And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Palantir Technologies made the list?

See The Six Stocks

More reading

Edward Sheldon has positions in Nvidia. The Motley Fool UK has recommended Nvidia. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.