Palantir Technologies‘ (NASDAQ:PLTR) a company that’s never been part of my Stocks and Shares ISA. That’s disappointing because this AI software stock has surged nearly 700% in the past five years.

For context, the S&P 500 is up 77% over this time, so Palantir’s delivered market-crushing outperformance for shareholders.

Recently, I’ve seen the company’s name popping up quite often in the media. On 1 October, for example, the Financial Times reported that UK Prime Minister Andy Burnham is searching for an alternative to Palantir in the NHS.

On that alert, I decided to take another look at the stock. Is Palantir a buy for my ISA today?

A polarising business

Now, I think it’s fair to say that many people distrust Palantir. As for why, there are a few potential reasons:

• Palantir works with the CIA and militaries, including Israel.
• The firm supports US Immigration and Customs Enforcement (ICE).
• Co-founder Peter Thiel has backed Donald Trump’s campaigns.
• There have been surveillance and data privacy concerns.
• Palantir explicitly states that Western values are superior.

That’s plenty to polarise opinion!

Ontology?

On top of this, Palantir’s business isn’t straightforward to understand. It often refers to ‘Ontology’, which it says “serves as a digital twin of the organisation, containing both the semantic elements (objects, properties, links) and kinetic elements (actions, functions, dynamic security) needed to enable use cases of all types“.

Confused? You’re probably not alone.

Without getting into the weeds, my understanding is that ontology is a digital map of how different pieces of data relate to each other. For example, in the NHS, it connects patients, doctors, hospitals, treatments and medical records, “helping improve efficiency and patient outcomes”. 

It’s hard for me to know whether this is being achieved, and there appears to be competing views. But what can’t be denied is that the company’s rate of growth is extraordinary, indicating that many organisations and businesses are indeed extracting a lot of value from its AI software. 

In Q2, revenue soared 93% to $1.9bn, putting the company on course for more than $8bn for the full year. For context, revenue was just $2.9bn in 2024! 

Moreover, the company’s extremely profitable. In Q2, it generated more net profit ($1.1bn) than it did in revenue in the same quarter the year before. That’s very rare.

Looking ahead, Wall Street expects revenue to more than double and hit almost $18bn in 2028.

Should I snap up Palantir stock?

Palantir’s contract to run the NHS’s data platform is worth $330m in total. Losing it wouldn’t be devastating, but it does remind me that there’s growing concern in Europe over a lack of AI/digital sovereignty, which is hampering growth opportunities.

Fact is, the overwhelming majority of Palantir’s revenue growth is coming from US firms. Therefore, a sudden slowdown in its US commercial business is a key risk. 

Another thing that worries me is the valuation. The stock’s trading at 80 times sales and 85 times forward earnings. 

At the current valuation, I think the risks outweigh the rewards. So I’m going to focus on other growth stocks, including ones in the UK that are much cheaper. 

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Ben McPoland has no position in any of the companies mentioned.