Palantir stock dubbed the future 'operating system for AI': find out more

Palantir Technologies Inc (NASDAQ: PLTR) has pulled back rather significantly in recent weeks as investors bailed on high-flying artificial intelligence (AI) stocks due to valuation concerns.

Despite the retreat, however, PLTR shares continue to trade at a frothy valuation – its forward price to earnings (P/E) ratio currently sits at nearly 360, prompting caution among Wall Street experts.

But Derek Yan, the senior investment strategist at KraneShares, sees recent weakness in Palantir stock as a buying opportunity, arguing the multinational is uniquely positioned to capitalise on the accelerating adoption of enterprise AI.

Here’s why Yan remains uber bullish on Palantir stock

Derek Yan continues to see PLTR stock as a core long-term holding because he expects the Nasdaq listed firm to become the foundational layer for enterprise AI deployment over time.

“Palantir has the potential to become the operating system for enterprises in the world of AI,” he said in a recent CNBC interview.

As a top holding in KraneShares’ AI-centric ETF (AGX), Palantir is viewed as a strategic enabler of agentic AI solutions, helping companies automate workflows and integrate AI agents into their operations.

Yan likened the current moment to the early days of cloud computing – suggesting Palantir shares offer a similar disruptive opportunity for investors.

He emphasised that as token costs decline and AI adoption accelerates, PLTR’s value proposition will only grow stronger.

PLTR valuation is unprecedented, but so is its growth

While critics point to PLTR shares' steep valuation, Yan counters that its growth metrics justify the premium.

“You’ve never seen that type of growth and margin previously for any other company,” he said on Worldwide Exchange, adding Palantir’s performance on the “Rule of 40” currently sits near 90, which is rare for software companies.

According to Derek Yan, the enterprise artificial intelligence market is still in its infancy, with a total addressable market potentially in the trillions.

Though the path to full-scale adoption may be uneven, he sees Palantir’s long-term trajectory as structurally bullish.

“The path toward that will never be easy. But it’s worth it,” he added.

Palantir shares aren’t overly reliant on federal contracts

There have also been concerns that PLTR shares rely too much on government contracts, especially on military spending, as roughly half of its revenue currently is tied to public sector deals.

However, Yan downplayed the risk in the CNBC interview, noting the company’s enterprise growth is now outpacing the federal business.

In the recently reported quarter, Palantir recorded a 93% year-on-year increase in US commercial revenue versus 53% in the government segment.

While defence applications still require advanced software, Yan believes the real transformation lies in commercial adoption.

“Just look at the enterprise opportunities across the world – that is something that’s going to change the business of Palantir in the coming decades,” he concluded.