Palantir Technologies Inc. (PLTR) is Attractive, Based on the "Rule of 40," Prominent Investor Says

Although Palantir Technologies Inc. (PLTR) stock has a "nosebleed" valuation, it does look attractive, based on the well-known "Rule of 40," prominent investor Bryn Talkington said during an appearance on CNBC.

The Rule of 40 uses a different criterion than traditional valuation metrics to determine whether to buy stocks.

But Talkington, who owns Palantir Technologies Inc. (PLTR) stock and is a Managing Partner of Requisite Capital Management, also suggested that PLTR was not attractive from a technical perspective at this point.

Assessing PLTR With the Rule of 40

The rule calls for adding companies' year-over-year revenue growth to their operating margins. If the sum exceeds 40, the firm is considered to be "great," Talkington said.

Palantir's result was 83, she reported.

Other Reasons to Be Upbeat About Palantir Technologies Inc. (PLTR)

Investors will continue to look to buy PLTR because of its exposure to AI, the investor said. Moreover, its commercial revenue jumped 19% last quarter, compared with Q4, Talkington noted.

Reasons To Be Cautious on PLTR

The stock is now close to its 150-day moving average and has formed a double bottom, she said.

Both of those developments would be viewed by many as negative from a technical perspective.

And Talkington advised those who don't own the shares to consider the stock's technical status before buying them.

While we acknowledge the potential of PLTR, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. There is an AI stock that went up since the beginning of 2025, while popular AI stocks lost around 25%. If you are looking for an AI stock that is more promising than PLTR but that trades at less than 5 times its earnings, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey