Stock-Split Watch: Is Palantir Next?

Palantir Technologies (NASDAQ: PLTR) went public in 2020, and over the last few years, its share price has skyrocketed. Since the start of 2023, Palantir stock is up over 2,600%. The company has benefited from the growth of artificial intelligence (AI) and its role with U.S. government agencies.

Fast-growing companies sometimes split their stocks to make their share prices more affordable. Nvidia has done this twice since 2021, and Amazon did it back in 2022. Let's see if Palantir could be the next tech business to conduct a stock split.

Image source: Getty Images.

Why would Palantir split its stock?

When a company carries out a stock split, it divides shares into smaller pieces. The number of outstanding shares increases and the share price decreases. For example, if one share of a company's stock trades at $1,500 and it conducts a 10-for-1 stock split, then each share would become 10 new shares priced at $150. An important point: stock splits don't change the fundamental value of the company or a shareholder's position.

Palantir would probably only split its stock if management felt a lower share price would attract more investors and increase trading volume. Since it's currently trading for under $200, a stock split is unlikely.

Most investors have budgets big enough to pick up shares of Palantir. Companies often start considering stock splits at share prices of around $1,000, so in all likelihood, Palantir won't be doing this in the near future.

Palantir is expensive -- but its share price isn't

A common criticism of Palantir is that its stock is expensive. This refers to Palantir's valuation and not its share price. Specifically, Palantir stock costs 114 times trailing sales and over 400 times trailing earnings, both extremely high numbers, even for a tech company. When you invest in Palantir, you're buying a company that's worth about $410 billion and has only made $3.89 billion over the trailing 12 months.

For an idea of how high that is, we can compare Palantir to two of its competitors in the software space. Microsoft is a well-known tech giant, while Snowflake is a smaller, more specialized data analytics company. Here's what their price-to-sales (PS) ratios look like next to Palantir's.

PLTR PS Ratio data by YCharts

Both of those companies have higher share prices than Palantir, but as investments, they're much cheaper. You pay much more for every $1 of sales with Palantir than you do with Microsoft or Snowflake. That doesn't necessarily mean Palantir is a poor investment -- the current valuation simply indicates that investors are much more bullish on its growth prospects. It does mean there's more risk with Palantir, as any missteps, or even slower revenue growth than expected, could send its stock plummeting.

A long way from stock split territory

We can't predict with 100% accuracy when or if Palantir will conduct a stock split. Based on what other companies have done, we can reasonably assume that the stock would need to increase quite a bit first -- maybe on the order of 5 times the current share price, getting it at least above $800.

At that point, Palantir would have a market cap of over $2 trillion. Only five companies have reached that mark to date.

Palantir's business is doing well. Its most recent earnings report, for the third quarter of 2025, was another winner, with revenue up 63% year over year to $1.2 billion. Another positive sign is that revenue was up on both the U.S. commercial side (121% year-over-year growth) and in U.S. government contracts (52%).

Still, at the current valuation, there's very little margin for error. If you're going to invest in Palantir stock, consider taking a cautious approach to start, given the risk involved. Maybe the growth will continue and Palantir will decide to do a stock split before you know it. If so, you can always increase your position accordingly with regular investments.

Lyle Daly has positions in Nvidia. The Motley Fool has positions in and recommends Amazon, Microsoft, Nvidia, Palantir Technologies, and Snowflake. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.