Palantir Applied sciences (NASDAQ: PLTR) was the best-performing member of the S&P 500 (SNPINDEX: ^GSPC) in 2024, and the corporate carried that momentum into 2025. Earlier this week, Palantir introduced distinctive fourth-quarter monetary outcomes pushed by sturdy demand for its synthetic intelligence platform.
The inventory rose greater than 20% on the information, pushing Palantir’s market worth to $230 billion. However Dan Ives at Wedbush Securities thinks that quantity is headed a lot larger. He lately instructed Schwab Community Palantir may very well be a trillion-dollar firm inside two or three years. That prediction implies 335% upside from its present market capitalization.
This is what buyers ought to learn about Palantir.
Palantir focuses on knowledge analytics. Its core software program merchandise, Foundry and Gotham, let shoppers combine advanced data and develop machine studying (ML) fashions. Its major supply of differentiation is software program constructed round an ontology, a framework that maps digital knowledge to real-world objects and defines the connection between them.
Customers can question ontology knowledge with analytics functions to floor insights that enhance decision-making. For example, a financial institution utilizing Foundry to handle account data throughout totally different branches might question its ontology with ML fashions skilled to establish fraudulent transactions and different monetary crimes.
In 2023, Palantir debuted AIP, a synthetic intelligence (AI) platform that provides help for giant language fashions to Foundry and Gotham, letting customers interact the platforms conversationally. For example, the financial institution from my earlier instance might immediate Foundry in easy textual content to mechanically escalate sure points and take acceptable motion, like freezing accounts suspected of cash laundering.
Worldwide Information Company (IDC) lately acknowledged Palantir because the market chief in resolution intelligence software program. And Forrester Analysis lately ranked the corporate as a expertise chief in AI/ML platforms, awarding AIP higher scores than related merchandise from Alphabet, Amazon, and Microsoft. “Palantir is quietly turning into one of many largest gamers on this market,” wrote analyst Mike Gualtieri.
Wanting forward, IDC estimates AI platform gross sales will improve at 40% yearly to succeed in $153 billion by 2028. Palantir at present ranks second behind Microsoft in income share, however the firm is rising like wildfire. Dan Ives lately instructed Yahoo Finance that no different firm has a product akin to AIP.
Palantir reported wonderful monetary outcomes for the fourth quarter, beating estimates on the highest and backside traces. Its buyer depend jumped 43% to 711, whereas the common current buyer spent 20% extra. In flip, gross sales elevated 36% to $828 million, the sixth straight acceleration, and non-GAAP earnings surged 75% to $0.14 per diluted share.
Story Continues
Palantir’s earnings have now exceeded expectations in six straight quarters, and the corporate’s precise earnings throughout that interval beat the consensus estimate by a median of 13%. In brief, most Wall Avenue analysts have constantly underestimated the corporate by a large margin. However the tide seems to be turning.
Mark Giarelli at Morningstar lately wrote, “Palantir’s excellent fourth-quarter outcomes, speedy progress amid the substitute intelligence arms race, and strategic positioning within the AI-value chain additional solidify our base case expectations that this firm may be the subsequent software program juggernaut.”
Since Palantir’s spectacular efficiency within the fourth quarter, quite a few analysts have raised their earnings forecasts and truthful worth estimates. Actually, the common goal value on the inventory is now $81 per share. That’s roughly double what it was a month in the past, and practically triple what it was three months in the past, based on knowledge from LSEG.
Moreover, Wall Avenue now expects earnings to extend 37% in 2025, a number of proportion factors sooner than what analysts anticipated earlier than the corporate reported fourth-quarter outcomes. Even so, the present valuation of 240 occasions adjusted earnings remains to be very costly by comparability. Traders needs to be very cautious about chasing the inventory at its present value.
Right here is the underside line: I feel Dan Ives is correct about Palantir turning into a trillion-dollar firm, however I doubt it can attain that milestone within the subsequent two or three years. A decade appears extra believable. I feel higher shopping for alternatives will come up sooner or later, however buyers wanting to personal shares can begin with a really small place right now, supplied they’re snug with holding these shares by way of volatility.
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John Mackey, former CEO of Complete Meals Market, an Amazon subsidiary, is a member of The Motley Idiot’s board of administrators. Suzanne Frey, an govt at Alphabet, is a member of The Motley Idiot’s board of administrators. Trevor Jennewine has positions in Amazon and Palantir Applied sciences. The Motley Idiot has positions in and recommends Alphabet, Amazon, Microsoft, and Palantir Applied sciences. The Motley Idiot recommends the next choices: lengthy January 2026 $395 calls on Microsoft and quick January 2026 $405 calls on Microsoft. The Motley Idiot has a disclosure coverage.
1 AI Inventory to Purchase Earlier than It Soars 335% to $1 Trillion, Based on a Wall Avenue Analyst was initially revealed by The Motley Idiot