Palantir Technologies (NASDAQ: PLTR) It has become one of the most sought-after growth stocks in the market. Upon going public through a direct listing on September 30, 2020, the data mining and analytics firm started trading with shares priced at $10 each. However, as things stand now, the price per share stands around $76 — which means an initial investment of $10,000 could be worth approximately $76,000 after roughly four and a half years.
The identical investment in an S&P 500 An index fund would currently be valued at roughly $16,700. We'll explore why this particular stock significantly surpassed the market performance by a large gap and whether it can continue to rise following those multi-bagger returns.
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What does Palantir do?
Palantir, which took its name from the all-seeing stones, The Lord of the Rings It was established in 2003 as a reaction to the September 11 terrorist attacks of 2001. The organization created an efficient data gathering and analysis system designed to eliminate the disjointed information barriers among different U.S. governmental bodies, enabling more informed, data-centric choices.
Palantir received support from the CIA’s venture capital wing, In-Q-Tel, and it was said to have been utilized in locating Osama Bin Laden in 2011. When Palantir made its debut on the stock market, many U.S. governmental organizations had already integrated its technology into their data management systems.
Palantir has two primary platforms: Gotham, designed for governmental clients, and Foundry, tailored for business clientele. The company experiences consistent expansion with Gotham via federal agreements; however, Foundry is experiencing rapid growth due to its proven solutions attracting numerous major corporate entities. A significant portion of this development comes from Palantir’s American-based businesses.
What is the growth rate of Palantir?
Between 2020 and 2024, Palantir experienced an expansion in their revenues with a compound annual growth rate of ( CAGR ) at 27%. Nevertheless, its expansion slowed down considerably in 2022 and 2023.
|
Metric |
2020 |
2021 |
2022 |
2023 |
2024 |
|---|---|---|---|---|---|
|
Commercial revenue growth |
22% |
34% |
29% |
20% |
29% |
|
Government revenue growth |
77% |
47% |
19% |
14% |
28% |
|
Total revenue growth |
47% |
41% |
24% |
17% |
29% |
Data source: Palantir.
The deceleration was pinned down to two main issues: adverse economic conditions impacting its commercial operations and the inconsistent scheduling of new governmental contracts. This downturn led to the company’s stock plummeting to an historic low of $6.00 on December 27, 2022.
However, in 2024, Palantir’s revenue growth picked up pace once more. The company saw renewed vigor in its commercial sector as strong performance within the U.S. compensated for sluggish international growth. Additionally, they extended their AI platform with an enhanced Workflow Builder designed to assist clients in developing bespoke AI applications, tasks, and entities. These fresh resources anchored the company even further. booming AI market.
Meanwhile, Palantir’s governmental sector rebounded due to escalating geopolitical strains and disputes, which increased the requirement for their data mining and analytical solutions.
Palantir was originally not turning a profit, but it achieved profitability according to Generally Accepted Accounting Principles (GAAP). GAAP In both 2023 and 2024, as the company benefited from increased economies of scale, it managed its expenditures more efficiently and reduced its reliance on stock-based compensation costs. This improvement in profitability resulted in its addition to the S&P 500 index last September and the Nasdaq-100 index last December.
Is Palantir capable of continuing to outperform the stock market?
In 2025, Palantir anticipates a 31% increase in revenue with both its governmental and business sectors performing exceptionally well. The company also projects maintaining profitability according to GAAP standards throughout each quarter. Analysts forecast that from 2024 through 2027, Palantir’s revenue and GAAP earnings per share will see an annual growth rate of 31% and 57%, respectively, fueled by the ongoing expansion of the data analytics and artificial intelligence industries.
Nevertheless, this optimistic view hinges on the assumption that the Trump Administration’s proposals to cut governmental expenditures will not hinder its public sector operations. Additionally, it presumes that the Trump administration’s erratic tariff policies will not create obstacles for its key commercial partners. Should these hurdles impede its expansion, the company’s stock might collapse due to its inflated valuation levels.
Palantir is currently valued with high expectations, trading at $76 per share, which equates to an impressive 246 times this year’s projected earnings. enterprise value The valuation of $172.3 billion seems excessive at 45 times this year’s revenue. This could explain why company insiders have sold approximately double the number of shares they’ve purchased in the last twelve months.
Even though Palantir could have a promising future ahead, investors should not purchase the correct stock at an incorrect price. Currently, it’s somewhat risky to invest in, and there's a higher chance of it failing to meet market expectations this year due to its elevated valuation limiting its potential gains.
Is investing $1,000 in Palantir Technologies at this moment a good idea?
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Leo Sun does not hold any shares in the companies listed. However, The Motley Fool does have investments in and endorses Palantir Technologies. The Motley Fool holds a position in Palantir Technologies. disclosure policy .
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