Palantir Technologies saw a 48% increase in annual revenue growth, with US commercial growing by 92% year over year. The Rule of 40, a combination of revenue growth and operating margins, reached an impressive 94%. Despite the company’s competitive advantages, trading at 100 times revenue may be difficult to justify.

The company’s success in the US commercial segment, which includes nongovernment entities, is driving rapid adoption of Palantir software. The company’s valuation is a major concern, trading at a 500% premium over other AI-oriented companies. Despite this, Palantir’s largest sequential guidance increase led to a fair value estimate raise to $115.

Palantir is projected to have 40% annual growth over the next five years, with revenue climbing to $21 billion. While momentum may continue to drive the stock higher, chasing it is risky. The market price may have disconnected from intrinsic value, and any slowdown could result in a significant decrease in returns.

Read more at Morningstar: Blockbuster Growth Amid High Expectations