In a landscape where high Price-to-Earnings (P/E) ratios often scare investors, a different metric defies skeptics that AI powerhouse, Palantir Technologies Inc. (NASDAQ:PLTR), which was battered last week for its high valuations following a Citron Research report, is not quite overpriced.
Check out PLTR's stock price here.
PLTR’s Valuation Edge Over Salesforce
Palantir may hold a valuation edge over enterprise software giant Salesforce Inc. (NYSE:CRM).
While its 2025 Price/Earnings-to-Growth (PEG) ratio of 1.6x is numerically higher than Salesforce’s 1.5x, some analysts view it through the lens of a “sleeper valuation” metric that could defy traditional P/E skeptics by factoring in robust future growth.
The PEG ratio is a stock valuation metric that compares a company’s P/E ratio to its expected earnings growth rate, providing a more balanced view of a stock’s fair value than the P/E ratio alone.
The analysis stems from a recent social media post by the Chief Market Strategist at Futurum Equities, Shay Boloor, highlighting the PEG ratio as a “sleeper valuation metric most ignore”.
Boloor explained that a PEG ratio under 1 suggests mispriced growth, while a ratio over 2 enters a “danger zone,” indicating a stock may be overvalued relative to its expected earnings growth.
See Also: Short Seller Andrew Left Says ‘OpenAI At $500 Billion Puts Palantir At $40’ — And That’s Generous
Oracle And Microsoft Sitting In The ‘Danger Zones’
According to a chart from Futurum Equities, Palantir’s 2025 PEG ratio is projected at 1.6x, placing it just above Salesforce’s 1.5x.
While a lower PEG is typically better, Palantir's valuation is notable when compared to other Big Tech firms.
For instance, Oracle Corp. (NYSE:ORCL) sits in the “danger zone” at 2.7x, while Microsoft Corp. (NASDAQ:MSFT) is at 2.4x.
Undervalued Tech Giants
Conversely, several tech leaders appear undervalued by this metric, with Nvidia Corp. (NASDAQ:NVDA) at 0.9x, Alphabet Inc. (NASDAQ:GOOG) (NASDAQ:GOOGL) at 0.9x, and Taiwan Semiconductor Manufacturing Company Ltd. (NYSE:TSM) at a remarkably low 0.6x.
For Palantir, its 1.6x ratio suggests that although its stock isn’t cheap, its high valuation is substantially supported by strong growth expectations, offering a compelling counterargument to those focused solely on its elevated P/E ratio.
According to Benzinga Pro, PLTR’s traditional forward P/E ratio stood at 250x as of the publication of this article.
Price Action
The stock fell 9.50% in the last five sessions, following the initiation of Andrew Left‘s Citron Research’s short position and its valuation comparison with OpenAI and Databricks.
However, it ended 1.64% higher on Friday. It was up 111.12% year-to-date and 414.55% over the last year.
Benzinga’s Edge Stock Rankings indicate that PLTR maintains a stronger price trend in the short, medium, and long terms. However, the stock scores poorly on value rankings. Additional performance details are available here.
The SPDR S&P 500 ETF Trust (NYSE:SPY) and Invesco QQQ Trust ETF (NASDAQ:QQQ), which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Friday. The SPY was up 1.54% at $645.31, while the QQQ also advanced 1.54% to $571.97, according to Benzinga Pro data.
On Monday, the futures of the S&P 500, Dow Jones, and Nasdaq 100 indices were trading lower.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
Photo courtesy: Mamun_Sheikh / Shutterstock
