Just 18 months ago, Palantir (NYSE:PLTR) was a struggling tech unicorn. Its revenue growth was decelerating, and its valuation was rumored to be declining on the private market. All the signs pointed to Palantir not living up to its long-running hype. However, PLTR stock came public via a direct listing last fall, and soon the meme-trading crowd embraced it.

Although Palantir did manage to ramp up its revenue expansion in 2020, its sales growth slowed again in its most recent reported quarter.

Meanwhile, Palantir continues to generate underwhelming profit margins as it spends huge amounts of money on research and development and administration. Many traders seems rather confident that PLTR stock is the next big thing, but I’m less sure of that.

Searching For Commercial Growth

Last week, Palantir announced a new partnership with an artificial intelligence (AI) firm, Data Robot. That might seem like a weird alliance. After all, Palantir itself is an AI company that analyzes big data to help companies make better decisions. So why is it partnering with Data Robot?

According to Palantir, Data Robot specializes in AI-based modeling and in forecasting demand. Those services, combined with Palantir’s core offering, should help retailers better determine how to manage their inventories heading into the upcoming holiday season.

For retailers, modeling demand in the post-Covid 19 world is more difficult than ever, so there may be strong demand in the sector for the services offered by Palantir and Data Robot.

More broadly, Palantir is seeking to obtain revenue from a higher number of consumer-facing companies.

There’s good money in government work. However, Palantir will need a wider customer base to justify its  current market capitalization of $46 billion. Palantir has been in business for nearly 20 years, but it generates annual sales of just $1.2 billion.

That’s not a great historical growth rate for a company that has created so much buzz. Clearly, its niche approach hasn’t translated to leadership status yet, so its increased emphasis on the commercial sector could be the right move.

Is Palantir’s Meme Status Helping Its Business?

I’ve long been skeptical about Palantir because it has struggled to find a very large market. The company has a dominant position in a number of niches, such as the military and intelligence agencies. However, it needs to find a way to increase its share of the broader SaaS market. That would truly make Palantir a rival to other leading software firms.

Interestingly enough, Palantir’s meme status may help it find a bigger audience outside of the government. In a recent interview, Palantir’s COO, Shyam Sankar, said that the company’s popularity on Wall Street is essentially giving it free advertising. Sankar reports that prospective clients with whom Palantir meets have often already bought PLTR stock and thus are more willing to sign up for the company’s services.

It’s hard to judge how big of an impact that phenomenon could have on Palantir’s sales. However, there does seem to be some truth to the idea that the  success of a company’s stock can actually help bolster its  sales and popularity.

The businesses of other companies have been helped by their stocks’ attainment of meme status. For example, loyal shareholders of AMC have gone  to the company’s theaters to support AMC stock.

The Bottom Line on PLTR Stock

For better or worse, Palantir has become a meme stock. That has changed the narrative around the company dramatically. Now instead of wondering whether Palantir will ever make its business model work on a large scale, we instead try to guess if a short squeeze is about to start.

This meme narrative may be interesting. But either way, Palantir does not hold much appeal for long-term investors. Eventually, Palantir may be able to find a mass market for its products. However, it’s not there yet.

Meanwhile, the current valuation of PLTR stock suggests that the firm is already a blockbuster success. That may happen one day. But there’s little sign of that materializing yet.

For those who want to bet on the power of AI software, there are much cheaper options around than Palantir. Investors should be wary of paying nearly 40 times a company’s trailing 12-month revenue primarily for a brand name and social media buzz.

On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.