Without a doubt, 2024 has been a fantastic year for Palantir Technologies (PLTR 1.66%) and its shareholders. Yet as the year draws to a close, you may be wondering where Palantir stock will be one year from now.
Here's what I think is most likely to happen.
Image source: Getty Images.
How Palantir has performed -- and why
Before I answer where Palantir is going, I'll recap exactly what the stock has already done. Between Dec. 15, 2023 and Dec. 16, 2024, Palantir stock increased in value by more than 315%. That makes it one of the top-performing stocks over that period, beating even other big winners like Nvidia (170%), Broadcom (121%), and Netflix (95%).
The artificial intelligence (AI) boom is behind Palantir's stock market success. The company is a leading developer of advanced AI systems for governmental and commercial organizations.
A simple review of Palantir's financials will show why investors are excited. Revenue in the company's most recent quarter (the three months ending Sept. 30, 2024) surged 30% year over year to $726 million. Growth in the U.S. was even faster, with total revenue increasing 44% from a year ago and U.S. commercial revenue growing 54% from a year earlier.
Yet the company's results are only half of the story. Palantir's management continues to trumpet that interest in -- and demand for -- its platform remain sky-high.
In his most recent letter to shareholders, Palantir CEO Alex Karp minced no words, stating: "The growth of our business is accelerating, and our financial performance is exceeding expectations as we meet an unwavering demand for the most advanced artificial intelligence technologies from our U.S. government and commercial customers."
Where Palantir could go in a year
Palantir had an excellent 2024, and management is optimistic about what's ahead. But can the company continue to deliver in the same way for another year? Could Palantir turn in another three-bagger performance over the next 12 months?
To answer that question, a dive into the details of how Palantir operates is necessary.
NASDAQ: PLTR
Key Data Points
Many investors know Palantir as a company with significant ties to the defense sector. The company maintains many important partnerships with defense agencies in the U.S. and other NATO-aligned countries. Moreover, Palantir continues to land massive contracts, such as a recent $37 million contract with the U.S. Special Operations Command and a $100 million contract with the U.S. Army Research Laboratory.
One could make the argument that Palantir, with its market cap of $167 billion, is already the largest defense contractor, having already surpassed companies like RTX ($157 billion), Honeywell ($153 billion), and Lockheed Martin ($114 billion). That said, Palantir's growth is being fueled more by the private sector than the public sector.
Roughly half of the company's revenue now comes from commercial clients and, as noted earlier, U.S. commercial revenue is growing faster than governmental revenue. If Palantir stock is to replicate its 2024 performance again next year, strong commercial growth will be the key to its success.
Is Palantir a buy now?
It's clear that Palantir has momentum. Its customer base is increasing, and management is confident in both the company's product and its appeal among customers.
It's unlikely that Palantir's stock will triple in the next year, as that would bring the company's market cap to an eye-popping $450 billion. However, I believe Palantir stock should enjoy a solid year of growth.
Investors should take the long view of Palantir. The stock may not replicate its fantastic performance again next year, but over the long term, investing in the company's stock remains an excellent way to profit from the growth of the AI application market.
