Palantir Technologies (PLTR +2.66%) was the best-performing member of the S&P 500 (^GSPC +1.14%) in 2024, and the company carried that momentum into 2025. Earlier this week, Palantir announced exceptional fourth-quarter financial results driven by strong demand for its artificial intelligence platform.
The stock rose more than 20% on the news, pushing Palantir's market value to $230 billion. But Dan Ives at Wedbush Securities thinks that number is headed much higher. He recently told Schwab Network Palantir could be a trillion-dollar company within two or three years. That prediction implies 335% upside from its current market capitalization.
Here's what investors should know about Palantir.
NASDAQ: PLTR
Key Data Points
Palantir is a leader in artificial intelligence software
Palantir specializes in data analytics. Its core software products, Foundry and Gotham, let clients integrate complex information and develop machine learning (ML) models. Its primary source of differentiation is software built around an ontology, a framework that maps digital data to real-world objects and defines the relationship between them.
Users can query ontology data with analytics applications to surface insights that improve decision-making. For instance, a bank using Foundry to manage account information across different branches could query its ontology with ML models trained to identify fraudulent transactions and other financial crimes.
In 2023, Palantir debuted AIP, an artificial intelligence (AI) platform that adds support for large language models to Foundry and Gotham, letting users engage the platforms conversationally. For instance, the bank from my previous example could prompt Foundry in simple text to automatically escalate certain issues and take appropriate action, like freezing accounts suspected of money laundering.
International Data Corporation (IDC) recently recognized Palantir as the market leader in decision intelligence software. And Forrester Research recently ranked the company as a technology leader in AI/ML platforms, awarding AIP better scores than similar products from Alphabet, Amazon, and Microsoft. "Palantir is quietly becoming one of the largest players in this market," wrote analyst Mike Gualtieri.
Looking ahead, IDC estimates AI platform sales will increase at 40% annually to reach $153 billion by 2028. Palantir currently ranks second behind Microsoft in revenue share, but the company is growing like wildfire. Dan Ives recently told Yahoo Finance that no other company has a product comparable to AIP.
Image source: Getty Images.
Wall Street has consistently underestimated Palantir
Palantir reported excellent financial results for the fourth quarter, beating estimates on the top and bottom lines. Its customer count jumped 43% to 711, while the average existing customer spent 20% more. In turn, sales increased 36% to $828 million, the sixth straight acceleration, and non-GAAP earnings surged 75% to $0.14 per diluted share.
Palantir's profits have now exceeded expectations in six straight quarters, and the company's actual earnings during that period beat the consensus estimate by an average of 13%. In short, most Wall Street analysts have consistently underestimated the company by a wide margin. But the tide appears to be turning.
Mark Giarelli at Morningstar recently wrote, "Palantir's outstanding fourth-quarter results, rapid growth amid the artificial intelligence arms race, and strategic positioning in the AI-value chain further solidify our base case expectations that this company can be the next software juggernaut."
Palantir stock looks very expensive at its current valuation
Since Palantir's impressive performance in the fourth quarter, numerous analysts have raised their earnings forecasts and fair value estimates. In fact, the average target price on the stock is now $81 per share. That is roughly double what it was a month ago, and nearly triple what it was three months ago, according to data from LSEG.
Additionally, Wall Street now expects earnings to increase 37% in 2025, several percentage points faster than what analysts expected before the company reported fourth-quarter results. Even so, the current valuation of 240 times adjusted earnings is still very expensive by comparison. Investors should be very cautious about chasing the stock at its current price.
Here is the bottom line: I think Dan Ives is right about Palantir becoming a trillion-dollar company, but I doubt it will reach that milestone in the next two or three years. A decade seems more plausible. I think better buying opportunities will arise in the future, but investors eager to own shares can start with a very small position today, provided they are comfortable with holding those shares through volatility.
