Could Artificial Intelligence (AI) Agents Dethrone Palantir in 2025?

Agentic AI is coming in 2025. In the first few days of the year, AI agents became a popular investing theme, representing the next iteration of artificial intelligence (AI) applications. With some of the biggest AI players going all-in on this technology, it might make existing AI powerhouses, like Palantir (NASDAQ: PLTR), a bit nervous.

Could this technology knock Palantir off of its perch as one of the top AI investments? The answer may surprise you.

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Palantir already has an agentic AI platform

Palantir emerged as one of the best pure-play AI investments in 2024. The stock had a phenomenal year, rising 340%. However, 2025 hasn't been so kind to Palantir stock, which has plummeted 16% to start the year.

Palantir became a hot stock as it continuously posted strong growth quarter after quarter. This is because it is a long-established player in this field.

Palantir started selling its AI software to government entities, giving those with decision-making authority the tools they needed to make the most well-informed decision when time is critical. This use case spread throughout government branches and eventually made its way to the commercial side. While government spending still accounts for most of Palantir's revenue, commercial clients are growing the quickest.

Part of the reason commercial is growing quicker is the rapid adoption of Palantir's Artificial Intelligence Platform, often called AIP. AIP allows AI models to be integrated within a system rather than being used as a chat on the side. AIP also has tools to automate some workflows within the application, which is essentially what AI agents do.

This is a key point in the Palantir investing thesis: It was already doing what others are getting excited about now. This gives Palantir a leg up on the competition and bodes well for Palantir's future.

But there's one problem.

Palantir's stock is so expensive future price appreciation may be limited

Although I'd consider Palantir a leader in the AI sector and a clear innovator, the stock has already baked in a huge rise. Despite stumbling to start 2025, the stock is still incredibly expensive from a valuation perspective.

PLTR PS Ratio data by YCharts

Palantir's stock trades for an unbelievable 62 times sales and 143 times forward earnings. This indicates that significant growth is already reflected in the stock price, and Palantir will have to grow rapidly to make these valuations worth it.

However, Palantir isn't putting up the growth it needs to justify these stock prices.

As mentioned above, Palantir is growing quickly, but its Q3 revenue only rose 30% year over year. While that shows strong growth in a vacuum, the stock's valuation indicates a company that should be doubling or tripling its revenue year over year. With Wall Street analysts projecting that Palantir's growth will slow in 2025 to a 25% pace, that's a huge problem for the stock.

So, what should investors do with Palantir stock? There is still a long way for the stock to fall before investors should consider scooping up shares again. Although Palantir is still at the forefront of innovative AI implementation, the stock has already priced that in and then some. There are much more attractive agentic AI investments to make right now, and I think investors would be better off turning their attention to those stocks than risk a lot with Palantir's high valuation.

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Keithen Drury has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.