Palantir is on a tear today and is on its way to the S&P 500 – time to buy the AI ​​stock?

Palantir (PLTR 13.53%) The stock is making big gains again in Monday trading. According to data from S&P Global Market Intelligence, the company’s share price was up 11.7% at 11:30 a.m. ET.

Palantir is rising in connection with the news that the company’s stock in the S&P500 Index. Companies in the index must meet criteria related to profitability, valuation, trading volume and other factors – and inclusion in the S&P 500 generally reflects that a company has performed well and its value has increased.

Inclusion in a major index has another major advantage. Exchange-traded funds (ETFs) that track the index buy shares of the newly included companies to reflect the changed composition. This in turn tends to lead to upward momentum in the companies’ shares. Since Palantir is set to be included in the S&P 500 before the stock market opens on September 23, the data analytics and artificial intelligence (AI) company’s stock is already benefiting from this momentum.

Is Palantir stock currently a buy?

Palantir’s business has been on a roll lately. Revenue grew 27% year over year in the second quarter, non-GAAP adjusted earnings per share rose 80% compared to the same period last year, and the company reported an adjusted free cash flow margin of 21%. The strong momentum is expected to continue in the near future.

Palantir began its career providing security analytics and other software services to government clients. The company has since rapidly expanded its business in the private sector – and its Artificial Intelligence Platform (AIP) software suite has played a big role in that. Last quarter, sales to commercial customers rose 33% year-on-year and accounted for 45% of total revenue. The technology specialist’s fastest-growing business segment will soon be its largest, and that suggests revenue growth has the potential to soar beyond already impressive levels.

Even better, Palantir’s business in the public sector has barely dipped. Sales to government customers rose 23% year over year in the second quarter and 11% quarter over quarter. With geopolitical uncertainty seemingly increasing, the company could continue to see strong demand in this segment.

Palantir’s growth engine has never been stronger and the stock looks like a worthwhile addition to the portfolio of risk-taking investors looking to invest in AI for the long term. Of course, investors need to keep their personal risk appetite in mind. Palantir is valued at 95 times this year’s expected earnings, so it is highly growth-dependent and could come under undue pressure if volatility hits the broader market.