Palantir Technologies (PLTR 1.65%) is one of the market's hottest artificial intelligence (AI) stocks. The stock has already risen 55% in 2025, on top of an incredibly strong 2024. Thanks to its growth over the past year, it has become one of the top AI software players.
However, what happened in the past is over; investing is about where a stock is heading. While short-term stock movements can affect the price you pay, investors should be focused on where the stock is going over the long term, which I typically quantify as five years.
So, where will Palantir be in five years? I think the answer could be surprising to most investors.
Palantir's growth can be tied to its AIP product
Palantir's platform can be summed up fairly simply: Data in, insights out. Its software was originally intended for government use and designed to take in all the available information and then spit out recommendations as to what those with decision-making authority should do. On the government side, Palantir's software has been used to handle anything from vaccine distribution to allegedly finding Osama bin Laden's final hideout.
This software eventually found solid use cases on the commercial side, so Palantir is in a lucrative position to sell to both government and commercial businesses. While the company's base software is still popular, the biggest driver of Palantir's latest round of growth has come from a new product: AIP (Artificial Intelligence Platform).
NASDAQ: PLTR
Key Data Points
AIP allows its users to interweave Palantir's AI products throughout the inner workings of a business or government entity. This is the next step toward AI integration, as it moves from being a tool used on the side to something that is required to perform daily tasks. Additionally, AIP gives developers the ability to create AI agents that can do tasks automatically.
This has been a massive growth driver for Palantir, and it translates directly to its strong financial performance. Palantir CFO Ryan Taylor stated on the company's fourth-quarter earnings call, "AIP continues to fuel new customer acquisition, as we have nearly five times the number of U.S. commercial customers as we did three years ago and significant expansion opportunities at existing customers."
He's absolutely right, as Palantir's commercial customer count rose 15% quarter over quarter, the fastest acquisition pace in 2024. This helped fuel commercial revenue growth of 31% in Q4.
However, government revenue shouldn't be ignored, either. In Q4, government revenue grew 40% year over year, outpacing commercial revenue by a significant margin. Government revenue is still a large component of Palantir's business, making up 55% of its total. So, government revenue needs to continue doing as well as it is for Palantir to continue growing at its impressive 36% year-over-year pace.
This is all impressive, but how does it give investors insight into where Palantir will be five years from now?
Palantir's stock is highly priced
The market has loved Palantir's results and bid up the stock accordingly. Palantir is now one of the most valuable software companies on the market, valued at around $270 billion. However, there's a lot of fluff baked into Palantir's stock right now, as it trades for an astounding 100 times sales and 618 times trailing earnings.
Those valuations are unbelievable, and not many investors can make a profit moving forward with those expectations baked into the stock. But can Palantir prove the doubters wrong? Let's take a look at Palantir's bull-case scenario. I'll assume these three things:
- Revenue growth is 40% annually over the next five years (Palantir projects 31% growth for 2025 at the high end of its projection).
- Palantir's profit margin reaches 30% (its current profit margin is 16%).
- Palantir's share count rises by 3% annually (it rose by 7% in Q4).
Clearly, this assumes the best outcome for Palantir's business over the next five years. But where does that leave the stock?
If Palantir achieved these numbers, its revenue would rise from $2.86 billion annually to $15.4 billion, and profits would increase from $462 million to $4.62 billion. That's a pretty amazing run, but where would it leave the stock valued?
Those figures (combined with share count growth) would lead to earnings per share (EPS) of $1.58. Using these projections, Palantir's stock trades at 74 times 2029 earnings. That's still a very expensive valuation, and it would require the stock price to not rise from today until 2029.
Remember, that's with the most bullish projections, so I think it's safe to say that Palantir's stock is incredibly overvalued at current levels. I expect its business to succeed over the next five years, but eventually the bubble will burst on the stock and send it back to more reasonable levels.
So, where will Palantir's stock be in five years? I'd guess it will be valued at the same price or even less.
