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After a slow start to the year, Palantir (NASDAQ: PLTR) has been on fire lately, igniting talks about how it could someday become a trillion-dollar company. But is that realistic?
Let’s take a look at what sparked the rally and see what a $10,000 investment could be worth in a few years.
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Palantir regained investor confidence with its latest earnings report
First, let’s look at where a $10,000 investment would have gotten you if you had begun investing in Palantir’s stock at the beginning of the AI arms race. If you had invested $10,000 in the stock at the start of 2023, that figure would now be worth an impressive $272,000.
However, that level of performance is practically impossible to maintain. At a $419 billion market cap, if Palantir returned the same 2,600% moving forward, that would price the stock at $11.3 trillion — more than double the size of the world’s largest company. So, if you think that a $10,000 investment in Palantir will make you a millionaire, think again.
But could Palantir do something more reasonable, like double or triple your money? That’s far more realistic, so let’s see if it’s possible.
Palantir’s business is growing at a rapid pace because its tools allow users to deploy AI alongside existing systems. Palantir has been in the AI game for a long time, and it has become the go-to software partner for the U.S. government to deploy AI. It also has a growing commercial business, making for a powerful one-two punch.
What ignited the rally in Palantir’s stock over the past couple of weeks was a blowout earnings report, in which Palantir delivered 93% year-over-year growth and produced an impressive 55% profit margin. Those figures show that the AI build-out is alive and well, and actually accelerating.
Looking ahead, Wall Street analysts expect 84% growth in Q3 and 75% in Q4. However, Palantir has a very strong and consistent track record of outperforming expectations, so don’t be surprised to see Q3’s growth rate end up around 90% or so. Next year, though, is where questions arise, as analysts only expect 49% growth.
Is that enough for Palantir’s stock to double or triple by 2028?
There is a lot of success priced into Palantir stock
The problem with Palantir isn’t its business; the business is doing incredibly. The issue is the stock, which is incredibly expensive.
