Palantir Technologies has become a hot topic in the investing world, with its stock surging more than 70% year to date. However, Warren Buffett, the legendary investor and CEO of Berkshire Hathaway, is unlikely to jump on the Palantir bandwagon anytime soon. Buffett is known for his disciplined approach to investing.
He typically invests in businesses he understands thoroughly. Palantir’s focus on artificial intelligence (AI) and its complex software platform serving government and commercial clients likely fall outside Buffett’s comfort zone. While Berkshire Hathaway has invested in software companies like Snowflake in the past, those decisions were reportedly made by Buffett’s investment deputies, Todd Combs and Ted Weschler.
Buffett himself has admitted he doesn’t fully grasp AI technology. Another red flag for Buffett would be Palantir’s unpredictable earnings growth. The company relies heavily on government contracts, especially from the U.S. Department of Defense and intelligence community.
This makes its revenue stream susceptible to political shifts and the volatile nature of federal funding.
Buffett’s cautious approach to Palantir
Buffett has emphasized the importance of being able to estimate a company’s future earnings with reasonable certainty.
The uncertainty surrounding Palantir’s long-term income would likely deter him from investing. Lastly, Palantir’s sky-high valuation would raise concerns for the value-oriented Buffett. The stock currently trades at around 104 times trailing 12-month sales and 238 times forward earnings.
Such lofty multiples demand exceptionally high growth rates to justify the price. While Palantir posted impressive 39% year-over-year revenue growth in Q1 2025, the company’s own guidance suggests a deceleration to around 36% for the full year. Analysts predict even slower growth in 2026.
Without a clear path to sustained, outsized earnings growth, Buffett would likely view Palantir as overvalued. In conclusion, despite Palantir’s recent market success, the company fails to meet the stringent criteria set by Warren Buffett for a potentially lucrative investment. Its complex business model, unpredictable earnings, and high valuation are significant deterrents for the legendary investor.
