Following Palantir Technologies' (PLTR 2.53%) recent customer event, Jefferies analyst Brent Hill maintained an underperform (sell) rating on the shares with a $60 price target, implying potential downside of 29% from the current share price.

Palantir stock has had an incredible run over the past two years, climbing 971%. The company's artificial intelligence (AI) platform has been in strong demand, but more analysts on Wall Street are starting to sound the alarm on the stock's high valuation.

Should investors take profits, or hold firm?

Out of 26 analysts who cover the stock on Wall Street, only eight rate the stock a "buy." The stock trades at a price-to-sales (P/S) multiple of 71, while trading at 441 times earnings and 180 times free cash flow. Those multiples imply sky-high growth expectations that may prove difficult to justify.

There's no doubt that Palantir is one of the leaders of the AI revolution, and its financial results back it up. Revenue growth has accelerated for six consecutive quarters and grew 36% year over year in the fourth quarter. It is also converting those revenues into a healthy profit, with its adjusted net income margin reaching 20%.

At its recent AI Platform event, Walgreens and Heineken were two of its latest customer announcements. Palantir also showcased six new customers for its Warp Speed manufacturing operating system.

However, the consensus analyst estimate calls for Palantir's revenue to grow 32% this year to reach $3.77 billion, which would be slightly higher than management's guidance. If Palantir maintains revenue growth at an annualized rate of 32%, it would take five years to bring its P/S multiple down to 17, which is about average these days for a fast-growing software company.

Investors who are sitting on large gains could consider selling at least a portion of their holdings. The stock could fall to the analyst's target of $60 and still be trading at an expensive 50 times revenue and 313 times earnings.