PLTR is a buying opportunity; stock is slightly undervalued with ~20% expected return over 12-18 months due to strong fundamentals.

Palantir raised its full-year 2026 revenue forecast to more than $8.1 billion on average, representing an 82% year-over-year increase. Given that this company is highly profitable in terms of operating profit margin and cash flow from sales, these revenue growth rates are likely to lead to booming profits and cash flows for investors.

I bought Palantir shares when their value dropped below $110 a share earlier this year , and I have mixed feelings about it because I really wanted to buy more Palantir shares.

I was only able to allocate one purchase to Palantir , not one share, but one allocation. I was hoping the stock price would stay at those levels so I could allocate more.

But I cannot complain. I saw the value of the shares I bought almost double. But does Palantir stock still represent a buying opportunity, or is it too late?

So, as I mentioned, Palantir's sales are booming, reaching $6.15 billion over the past 12 months , and management expects the good times to continue and even accelerate.

Palantir stated that its competitive advantage lies in the fact that it actually uses artificial intelligence to help companies and organizations achieve results. They are not playing mind games with artificial intelligence and trying to showcase imaginary things they could use it for without those use cases leading to lasting improvements in business, are they?

Palantir says that much of this is already happening. There are many companies that use or integrate artificial intelligence just to say they are doing so without achieving actual results .

If an organization or company truly wants to achieve results, Palantir is one of the few resources that can help it do so. They deploy field engineers who integrate within companies , helping them leverage their own data to gain insights using artificial intelligence.

Palantir criticizes those efforts. Palantir says these are just sales staff, right ? They are brilliant sales engineers. They are not real engineers helping companies implement artificial intelligence, but rather sales staff disguised as engineers, entering companies to try to sell them services and boost their sales with services that do not actually deliver any tangible benefits.

When you look at Palantir's results and look at the types of organizations that use Palantir, you get the feeling that what they say is actually true.

Their results, and their total revenue, are accelerating. Their corporate revenues are also accelerating. We always knew that Palantir had excellent relations with US government institutions.

They were getting great contracts and revenue growth from the U.S. government, but recently, they have significantly accelerated their business with companies, which is proof to me that they are delivering great added value to customers.

Palantir managed to do this while keeping costs under control , which really impressed me. Their operating profit margin has risen to over 42%, approaching 43 %.

So, Palantir generates a small fraction of the sales of a company like Microsoft, but it is almost equal to Microsoft in terms of operating profit margin.

This really impresses me, and I expect that if Palantir’s revenue growth rate comes in as management forecasts for 2026 and beyond, its operating profit margins could approach 60% or more.

Similarly, their return on invested capital rose to over 38%. Therefore, the money they reinvest in the business achieves great results. This company could have done more, but it was constrained in allocating to new categories, focusing on its core competencies and expanding only in the margins.

It is a relatively asset-light business model, being a software company that does not require investments in infrastructure. They do not need to build data centers, nor do they need to build semiconductor manufacturing facilities .

Thus, it is a relatively asset-light business model that has the potential to become extremely profitable, with returns on invested capital potentially more than double what they are today.

So, as the stock price has risen since I bought shares, I was concerned about the valuation and was monitoring it , which is still far from the levels it was at earlier in 2026 or late 2025.

The stock is currently trading at a forward P/E ratio of 79, while at its peak it was trading at a forward P/E ratio of 130. Previously, when the stock was trading at around $200 per share, I remember warning investors that the stock looked overpriced at those times, and that was in late 2025 and early 2026.

This assessment proved to be correct because the stock price crashed to around $107 per share. I bought Palantir shares when the forward price-to-earnings ratio fell below 60.

A forward price-to-earnings ratio of 79 still looks attractive for a company that is in a better position today than it was a year ago.

However, today's valuation is much more attractive than it was a year ago when it was trading at a forward price-to-earnings ratio of over 100. Today, the company's balance sheet is much better.

The company has billions of dollars in additional funds in its bank account. Those billions of dollars generate a return rate for the company ranging between 4 and 5 percent.

In addition, the company added new clients, increased its backlog of contracts, and strengthened its presence in more companies. All of this makes the business more attractive than it was a year ago, yet we get the stock at a lower valuation than it was a year ago. This is a good situation.

Today I also updated my assessment of Palantir’s discounted cash flows, and there were only a few upward adjustments to my expectations for the company’s discounted cash flows in 2026 and beyond.

Slight upward revisions to Palantir's estimated free cash flow figures over the next few years.

After these adjustments, the intrinsic value of the stock, which I calculated slightly, rose by a few dollars to reach $195. The current market price is $183. Today was a great day for Palantir stock investors.

The stock rose by 7.7%. So even after this rise, there is still room to go up compared to my current fair value estimate of 6.8%.

Sometimes when I calculate a fair value estimate that shows an upside of only 6.8%, investors think that I only see the stock price rising by 6.8% over the next 12 to 18 months.

This is only partially true. I also expect the share price to acquire the amount of its cost of equity , which for Palantir is 13.8%. Thus, I expect the company to achieve a rate of return of approximately 20% from this point onwards during the next 12 to 18 months .

So, for me, and considering the overall valuation, the stock still seems slightly undervalued . It could be said that it is slightly, or moderately, undervalued.

To answer the question, do I think Palantir stock is still a buying opportunity? I say yes. I still believe that Palantir stock represents a buying opportunity.

I am less optimistic about Palantir stock today at these high prices than I was a month or two ago when the price was much lower than it is now. As for me, and whether I will buy more Palantir shares, I probably won't buy at these levels before the company announces its next quarterly results.

Therefore, if the stock price remains the same as today, but the company shows better performance in its upcoming earnings announcement , I will become more optimistic about Palantir's stock. I might be interested in buying at that stage.

Or if the share price falls while everything else remains the same, I might be more interested in buying Palantir stock.