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There's one thing Palantir's post-earnings reaction shows: Valuations still matter on Wall Street. The data analytics company that boasts big government contracts reported third-quarter earnings and revenue that beat analyst expectations . Revenue from its U.S. government business soared by 52% from the same period a year ago. But shares fell more than 8%, as investors worried about the company's lofty valuation. The stock trades at a forward price-to-earnings multiple of 228. In contrast, the S & P 500 sports a forward ratio of around 23. Palantir had jumped 20% in the past month going into the report, and nearly 30% in the past three months. "Despite our admiration for the company, valuation is still very difficult to wrap our heads around," Deutsche Bank analyst Brad Zelnick wrote. But Palantir isn't the only expensive stock investors have driven higher. CNBC Pro looked at the three most common metrics used by investors to measure valuation: forward price-to-earnings ratio, forward price-to-free cash flow and forward price-to-sales. We then screened to find the companies which rank in the top 10th percentile in each of these three metrics among S & P 500 companies. One could argue we are even being generous using the forward figures, because they are relying on Wall Street estimates for the next 12 months, which could prove too optimistic. Even using those estimates, the following companies are expensive on every measure. While Palantir is head-and-shoulders above the other stocks on the list, AppLovin and CrowdStrike also trade at lofty levels by each of these yardsticks. AppLovin has a PE multiple of 47.4 and a price-to-free cash flow ratio of 44.8. In terms of price to sales, it trades at 29.3 times. CrowdStrike's earnings and free cash flow ratios are even higher, at 122.6 and 79.9, respectively. On a price-to-sales basis, it trades at 24.8. The valuations haven't stopped the stocks yet. AppLovin is ahead 95% and CrowdStrike by 61% in 2025. Palantir has soared 174% year to date. In fact, 12 of the 19 stocks on the list are outperforming the S & P 500 this year, so investors are willing to pay up for these premium valuations for now. But, such multiples do leave the stocks vulnerable if the broader market comes under pressure. —CNBC's John Melloy contributed reporting.
