Palantir Technologies stock just hit another record, but the lofty valuation of the defense-focused artificial-intelligence software company has analysts questioning whether it can go much higher.

Palantir stock briefly fell 1.9% early Tuesday after having risen in premarket trading. Shares closed 2.9% higher Monday, ending at a record high of $141.41, according to Dow Jones Market Data.

The stock also hit a record intraday high of $144.86.

It's difficult to overstate the Palantir rally: Shares are up nearly 500% from its 52 week low in June last year. Coming into Tuesday trading, the stock had gained 87% only this year.

It had 17 record closes just this year -- five of them this month, according to Dow Jones Market Data. In comparison, it had 23 record closes in 2024.

The company has ridden the AI wave and is now also benefiting from heightened geopolitical tensions in the Middle East as a large chunk of its business comes from the U.S. Defense Department.

But analysts are increasingly questioning how sustainable Palantir's lofty valuation is. Shares currently trade at 203 times forward earnings, compared with the average among S&P 500 companies of 22.3.

Only 25% of the 18 analysts covering the stock have a Buy or Buy-equivalent rating on the stock, according to FactSet. The average target price is $107, suggesting shares might have peaked.