Palantir's valuation is perched on extreme levels, at 245x forward earnings, far exceeding software peers. Commercial and government segments are both gaining credence, helping the bulls justify their thesis. Despite robust execution and growth, the risk of multiple compressions is high for investors who don't exercise caution in deciding to add more exposure at such frothy valuations. With PLTR's growth rate potentially peaking this year, the market momentum could reverse to the downside, ensnaring the overoptimistic bulls. Valuations may not matter until they do. By then, you might regret not selling when you could.

How do we make sense of a software stock that's trading at a forward earnings multiple of almost 245x, as compared to the software median of 41x? I don't think I need to provide

We believe price action is a leading indicator. We called the TSLA top in late 2021. We then picked TSLA's bottom in December 2022. We updated members that the NASDAQ had long-term bearish price action signals in November 2021. We told members that the S&P 500 likely bottomed in October 2022. Members navigated the turning points of the market confidently in our service. Members tuned out the noise in the financial media and focused on what really matters: Price Action.

This article was written by

JR Research is an opportunistic investor. He was recognized by TipRanks as a Top Analyst. He was also recognized by Seeking Alpha as a "Top Analyst To Follow" for Technology, Software, and Internet, as well as for Growth and GARP. 

He identifies attractive risk/reward opportunities supported by robust price action to potentially generate alpha well above the S&P 500. He has also demonstrated outperformance with his picks. 

He focuses on identifying growth investing opportunities that present the most attractive risk/reward upside potential. His approach combines sharp price action analysis with fundamentals investing. 

He tends to avoid overhyped and overvalued stocks while capitalizing on battered stocks with significant upside recovery possibilities. 

He runs the investing group Ultimate Growth Investing which specializes in identifying high-potential opportunities across various sectors. He focuses on ideas that has strong growth potential and well-beaten contrarian plays, with an 18 to 24 month outlook for the thesis to play out. 

The group is designed for investors seeking to capitalize on growth stocks with robust fundamentals, buying momentum, and turnaround plays at highly attractive valuations. 

Analyst’s Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. 

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Palantir: Don't Wait Till The Bubble Implodes (NASDAQ:PLTR)

The article analyzes Palantir's extreme valuation of 245x forward earnings, highlighting its growth in commercial and government segments while cautioning investors about potential multiple compressions. It discusses the importance of price action analysis and the role of analyst JR Research in identifying growth opportunities.