Palantir Technologies (PLTR 4.71%) was the best-performing member of the S&P 500 (^GSPC 0.00%) last year. Shares jumped 340% amid soaring demand for its artificial intelligence platform AIP, and that momentum has carried into the current year. The stock has advanced 49% in 2025 as of Feb. 11, such that Palantir is once again the best-performing member of the S&P 500.
Wall Street has been consistently and overwhelmingly bearish on Palantir. In December, it ranked among the 10 stocks in the S&P 500 with the highest percentage of sell ratings, and it was the most overvalued stock in the index based on the discrepancy between its share price and median target price. But sentiment has changed dramatically in the last two weeks.
Since Palantir reported its fourth-quarter results, numerous analysts have made substantial upward revisions to their earnings forecasts and fair value estimates. Dan Ives at Wedbush Securities even predicted Palantir could be a trillion-dollar company within a few years.
Here are the important details.
Wall Street analysts have revised their earnings forecasts and fair value estimates much higher
Palantir reported fourth-quarter financial results that crushed Wall Street's estimates on the top and bottom lines. Its customer count increased 43% to 711, and the average existing customer spent 20% more. Revenue rose 36% to $828 million, the sixth straight acceleration, and non-GAAP earnings increased 75% to $0.14 per diluted share.
Palantir also gave stronger guidance than Wall Street anticipated. Management estimates that first-quarter revenue will increase 36% to $860 million in 2025, while full-year revenue increases 31% to $3.7 billion. That upbeat outlook led multiple analysts to raise their earnings forecasts and fair value estimates, as detailed below:
- Wall Street expects Palantir's adjusted earnings to increase at 31% annually to reach $0.70 per diluted share in 2026. That estimate is 21% higher (as measured in dollars) than it was before the company reported its fourth-quarter financial results.
- Palantir has an average 12-month target price of $92.50 per share. That fair value estimate is 106% higher than it was one month ago, and 182% higher than it was three months ago, according to LSEG.
Admittedly, the average target of $92.50 per share still implies 17% downside from the current share price of $112. But Wall Street has consistently underestimated Palantir, and that pattern may continue. Palantir has a strong presence in the artificial intelligence (AI) platforms space -- its market share is second only to that of Microsoft -- and spending on AI platforms is projected to increase at 40% annually through 2028.
Dan Ives says Palantir may be a trillion-dollar company in a few years
Dan Ives is the senior equity analyst and global head of technology research at Wedbush Securities. He has consistently been bullish on Palantir despite widespread pessimism from his peers on Wall Street.
In August 2023, Ives told CNBC Palantir was "probably the best pure-play AI name" on the market. In March 2024, he called Palantir's AIP product a launchpad of AI use cases. And in December 2024, he said Palantir could be the next Salesforce or even the next Oracle, a comparison that implies its revenue could increase by an order of magnitude in the future.
However, Ives recently made his boldest prediction to date following the company's strong performance in the fourth quarter. He told Schwab Network that Palantir could have a $1 trillion market capitalization within two or three years. That implies 300% upside from its current market value of $250 billion.
Image source: Getty Images.
Palantir is still a very expensive stock
Palantir stock currently trades at 270 times adjusted earnings. That valuation multiple is absurdly expensive for a company whose earnings are projected to grow at 31% annually through 2026. In fact, that valuation would be expensive even if Palantir's earnings increase twice as fast as Wall Street anticipates.
However, I also think Palantir will be worth more in the future. The company may even hit the trillion-dollar target set by Dan Ives. With that in mind, long-term investors eager to own shares can buy a very small position today, provided they understand the stock could decline sharply at the first hint of bad news.
Personally, I think the most prudent course of action is to wait for better buying opportunities. Investors can build a position over time by purchasing a few shares each time the stock dips, so long as the investment thesis remains sound.
