Palantir Technologies (PLTR -0.22%) has not been spared from the recent stock market crash, with the stock trading down roughly 29% from its highs as of this writing. As an investment, the stock remains a bit controversial given its high valuation, but it also has one of the best potential long-term opportunities of any stock in the market.

Let's look to see if the stock is a buy now given its recent pullback.

A potential Trump administration winner

One of the ongoing oddities about Palantir is that most investors don't know what the company actually does. The company originally developed a data gathering and analytics platform that was very good at recognizing hard-to-find patterns -- a function that the U.S. government began to use to fight terrorists and drug cartels. Since then, it has developed an artificial intelligence (AI) platform that is meant to be used as an (AI) operating system where users can connect digital assets with their real-world counterparts to apply AI to real-world problems.

Its AI platform is being used by both commercial customers and the U.S. government, which is its largest customer. On the commercial side, it is helping customers identify problems they have been struggling with and apply AI to provide actionable solutions. This could be something like helping a customer apply AI to help solve supply chain bottlenecks. Meanwhile, on the government side, the company's solutions can help with mission-critical tasks, including on the battlefield where its solutions can gather data from disparate sources, such as satellite and drone imagery, and give military commanders a fuller picture of troop movements and provide the best ways to respond.

As a data analytics and software company, Palantir has no direct exposure to the U.S. tariffs being enacted. However, tariffs could impact some of its commercial customers, which could impact their spending budgets. On the other hand, given that the company's AI platform is meant to create efficiencies and solve problems, it could actually be a beneficiary of tariffs as companies scramble to optimize their supply chains. Palantir even has a solution called Warp Speed that it developed to help companies get domestic operations up and running quickly and efficiently.

On the government side of its business, the biggest issue it faces isn't tariffs but budget cuts to the Department of Defense (DOD) as part of the current Department of Government Efficiency (DOGE) initiatives. The Trump administration has asked the DOD to cut its budget by 8% a year over the next five years. That's a big cut in spending that could hurt a company like Palantir that is heavily tied to the DOD.

However, given that its AI solutions are meant to create efficiencies, there is also the distinct possibility that Palantir's software could be a DOGE winner. CEO Alex Karp suggested as much in an earlier interview discussing DOGE. Meanwhile, in a not very well-publicized initiative, the DOD was directed to default to the rapid acquisition processes when buying software. This should considerably reduce procurement times for software purchases and reduce the number of custom solutions that the DOD develops. This should be good news for a company like Palantir.

As it is, Palantir's biggest opportunity, though, is accelerating growth within its own customer base. The company has added a lot of new commercial customers over the past year, but most of them are still in the proof-of-concept stage. As these solutions get moved into production to solve real-world problems, this should be a strong revenue driver for Palantir.

Image source: Getty Images.

Is it time to buy Palantir's stock?

The biggest issue surrounding Palantir remains valuation. The stock trades at a forward price-to-sales (P/S) ratio of more than 48 times, which is still more than double what software-as-a-service (SaaS) stocks traded at during their peaks around 2021. The company grew its revenue by 36% last quarter, which is not dissimilar to the more than 30% growth that SaaS companies were seeing at this time.

Data by YCharts.

Meanwhile, stock valuations tend to come under much more scrutiny during bear markets. The long-term upside of Palantir is unquestionable. The unknown, though, is how much of that is already captured in the stock, given its valuation. That said, Palantir certainly seems like it has the long-term potential to be a $1 trillion stock.

Given its frothy valuation, I would only dip my small toe into a position at this point. However, if the market continues to come under pressure, it is a stock you certainly want on your list to buy.