Palantir Stock Is Flying Higher Today -- Should You Buy This Red-Hot AI Stock Before May 5?

Johnny Rice, The Motley Fool

Fri, May 2, 2025, 12:50 PM 3 min read

Key Points

Investors breathed a sigh of relief after the latest jobs numbers were released.
Palantir's stock carries a hefty multiple that makes it especially vulnerable to downturns in the market.
Palantir's May 5 earnings call will shed more light on how the company expects to be affected by the macro environment.

Shares of Palantir (NASDAQ: PLTR) are rising on Friday. The company's stock gained 5.8% as of 12:14 p.m. ET but gained as much as 6.9% earlier in the day. The leg up came as the S&P 500 gained 1.3% and the Nasdaq Composite lost 1.6% on the day.

Shares of the artificial intelligence or AI-powered analytics company received a boost today after the latest jobs numbers were released. The report painted a better-than-expected picture, easing fears of a recession.

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The job market appears steady

The Bureau of Labor Statistics reported stronger-than-expected job growth for April. Nonfarm payrolls increased by 177,000 jobs, far surpassing economists' expectations of 133,000, while the unemployment rate held steady at 4.2%. Another metric that includes people who consider themselves underemployed and those working part-time jobs, dropped -- another positive sign.

Many had feared the report would show signs that Trump's tariffs were leading to a weakening job market, but at least for now, the market looks mostly healthy.

A group of people interconnected by lines. — Image source: Getty Images.

Palantir's valuation makes it vulnerable

Since the company deals in software, it is more shielded from the impacts of Trump's tariffs than many in the AI space, at least directly. But many of its clients aren't so lucky and could start tightening their belts if their bottom lines are meaningfully hurt, leading to lost contracts for Palantir. While today's report is encouraging, we're not out of the woods yet.

Palantir stock carries a hefty premium, trading at nearly 650 times earnings. That is really an incredible multiple. When investors are willing to pay such a premium, they expect the company to deliver perfection, more or less. That makes Palantir's stock especially vulnerable to changes in the macro environment. While the company's earnings call on May 5 will tell us more about how much it expects to be affected by the tariffs or their downstream effects, I can't recommend Palanitr at its current valuation.