Here's an interesting fact about Nov. 8, 2016, that you may already know: It was Election Day. Donald Trump and Hillary Clinton were locked in a race to become the 45th president.
But here's another fact that you probably don't know: If you had invested $20,000 in Nvidia stock on that day -- and held it until today -- you'd be a millionaire.
That's right, just $20,000 invested in the right time -- in the right stock --can set you up for life.
So, with that in mind, let's take a look at Palantir Technologies (PLTR 3.73%) and see if it has the same potential.
Image source: Getty Images.
What does Palantir Technologies do?
Palantir is a leading provider of what is called "big data analytics." But what does that really mean?
Well, Palantir's business model reminds me of a famous BASF advertising tagline: "We don't make many of the products you buy; we make many of the products you buy better."
In a nutshell, Palantir does the same thing, albeit in a very different way. The company uses AI-powered platforms to monitor and analyze data, with the goal of recognizing patterns and improving processes.
For example, Tampa General Hospital used Palantir's Foundry platform to reduce patient hold time in its Post-Anesthesia Care Unit by 28% through AI-driven data analysis. In addition, AI analysis of nurse schedules, surgery schedules, and census data has improved operational efficiency. After removing bottlenecks, the hospital's nurse staffing ratio increased by 30%.
Palantir's revenue is increasing as its customer base expands
As a result of its ability to drive real-world results, Palantir's AI platforms are in demand. Revenue increased from $0.9 billion in 2020 to $2.2 billion last year. What's more, analysts expect the company's sales to increase to $2.7 billion this year and $3.2 billion in 2025.
Although the majority of Palantir's revenue is from governmental organizations, such as the U.S. Department of Defense, the National Institutes of Health, and the U.K.'s National Health Services, commercial customers are the future. In its most recent quarter (the three months ended on Dec. 31, 2023), Palantir's U.S. commercial customer count surged by 55% year over year. Its U.S. commercial revenue jumped 70% to $131 million.
Could a $20,000 investment grow to $1 million?
Finally, let's talk about what is reasonable from a stock perspective. Palantir's shares currently trade for about $25. So, for a $20,000 investment to grow to $1 million, shares would need to hit a price of about $1,250.
Needless to say, that would take an incredible amount of growth. In compound annual growth rate (CAGR) terms, shares would need to return 47% each year for 10 years.
Over a more reasonable 20 years, Palantir stock would still need a CAGR of almost 22% to turn $20,000 into $1 million.
That might be a bit much to expect despite Palantir's potential.
Nevertheless, long-term investors shouldn't overlook the company. Its AI platform could prove to be a real game-changer across numerous industries, and, with time and patience, modest investments in Palantir stock could still add up to big returns.
