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. 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.

Palantir may hold a valuation edge over enterprise software giant Salesforce Inc. 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

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. ORCL sits in the “danger zone” at 2.7x, while Microsoft Corp. MSFT is at 2.4x.

Conversely, several tech leaders appear undervalued by this metric, with Nvidia Corp. NVDA at 0.9x, Alphabet Inc. GOOG GOOGL at 0.9x, and Taiwan Semiconductor Manufacturing Company Ltd. 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.

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 SPY and Invesco QQQ Trust ETF 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