If you’ve been paying attention to the tech world for the past couple of years, you’ve likely noticed how unavoidable artificial intelligence (AI) is. Even if you haven’t been tuned into tech news, chances are good that you’ve come across AI in some form or fashion.

This AI hype has made many tech stocks go-tos for investors looking to capitalize on the new technology, but there have been very few stocks that Wall Street has obsessed over quite like Palantir Technologies (PLTR 4.14%). The stock is up over 120% year to date through Sept. 10, and up over 378% in the past 12 months.

Image source: Getty Images.

Why the obsession with Palantir?

The reason why Wall Street has become obsessed with Palantir is that the company has demonstrated that it’s not a one-trick pony.

For a while, Palantir was viewed as a niche data software company that served government agencies like the U.S. Department of Defense and CIA. However, the growth of its U.S. commercial business — thanks to its Artificial Intelligence Platform (AIP) — has shown that the company can scale in the private sector and compete in the mainstream enterprise AI space.

In the second quarter, Palantir’s U.S. commercial business increased its revenue 93% year over year to $306 million. Although it didn’t earn more than Palantir’s U.S. government revenue ($426 million), it was easily its fastest-growing segment.

Should you also be obsessed with Palantir?

Palantir showing additional revenue streams is encouraging, but if you’re not currently an investor, you should proceed with caution before going all in on the stock because of its extremely high valuation. Palantir is currently trading at close to 267 times its forward earnings, which is one of the highest in history on the stock market, regardless of the company.

This doesn’t make Palantir a bad investment, but such a high valuation means that investors have priced a lot of growth into the stock, and anything short of meeting these lofty expectations could result in a sharp pullback.