Palantir (PLTR 11.14%) has been one of the hottest stocks of the year, up about 275% at the time of writing. However, much of that gain came right after Palantir’s stellar third-quarter results; the stock rose 23% the next day. But that strength has continued well beyond the day after the results, as the stock is now up 56% since the company announced stellar results on November 4.

Clearly, many investors are rushing into Palantir stock, but is it a good idea? After all, the stock has seen a massive rise and carries extremely high expectations.

Palantir’s products have been widely adopted

Palantir is an artificial intelligence (AI) company that has made its name creating custom AI models for government. Eventually, it expanded into the commercial space. In the third quarter, government affairs still account for the majority of its revenue, but the split is very narrow, with government revenue accounting for 56%.

Palantir’s AI model gives decision-makers real-time advice based on the data it receives. This is useful in any situation where real-time decisions need to be made quickly and accurately. Given that it’s a huge part of what governments and businesses do, it makes sense that Palantir’s business is growing rapidly, with many customers rushing to implement AI in their systems.

Another key product introduced by Palantir is its Artificial Intelligence Platform (AIP). AIP enables its customers to integrate AI into the internal workings of a business, making AI a tool that is not just used at the margins. This is a key differentiator compared to many AI products available and is a key reason for Palantir’s stellar results.

In the third quarter, Palantir’s revenue increased 30% year over year to $726 million. In particular, commercial revenues in the United States increased by 54% year-over-year. If this demand spread globally, it would not be out of place to see its overall revenue growth accelerate to this level.

Additionally, Palantir is not a growth-at-all-costs company. It is very profitable and achieved a 20% profit margin in the third quarter.

These are fantastic results that investors should welcome. However, if the stock’s exuberance factors in all future growth, there is no reason to hold it going forward. I fear we’ve reached this point, because the expectations inherent to Palantir stock are quite high.

Palantir stock is more expensive than Nvidia’s has ever been

While 30% revenue growth is impressive, it’s not. that impressive. AI leader Nvidia has had several quarters where revenue growth was over 200%, and even if it slows down, Nvidia is still expected to grow revenue by around 80% next quarter.

However, Palantir is now trading at levels Nvidia shares have never reached.

PS PLTR report data by Y Charts

With Palantir being priced higher than Nvidia, despite revenue growth an order of magnitude slower, it doesn’t pass the smell test.

Additionally, looking at current expectations for the stock, it’s clear that Palantir has risen too far, too fast.

Let’s say the goal for Palantir’s stock is to trade at 50 times current earnings (still a very high valuation). Additionally, assume Palantir maintains its 30% revenue growth and current 20% profit margin. At this rate, it will take more than six years to reach this valuation.

This assumes two things: first, the stock price does not move from current prices, and second, the number of shares does not increase. Considering that Palantir’s stock count is up 3.5% over the past year, this is a bad assumption and would further increase the time it would take to reach our goal.

In reality, Palantir has probably already priced about seven years of growth into the stock price at its current growth rate and profitability level. This is a huge number that probably won’t sit well with investors. As a result, I think it’s best for investors to avoid the stock or at least cut some of their gains. Few (if any) stocks have traded at more than 50 times sales and performed. If Palantir was triple its revenues as Nvidia did in its early days, I would disagree, but 30% revenue growth won’t be enough at its current valuation.