If you invested $10,000 in Palantir Technologies (PLTR +3.84%) at the end of 2022 and held the stock until today, you'd have over $200,000 in the company's shares today. It seems like there's nothing in the world that could slow down the AI stock from soaring higher over the next 15 years. The unfortunate truth is that it's very unlikely you can turn a small investment in Palantir into $1 million by 2040 if you started today.
Even a substantial and ongoing investment into the stock will struggle to turn into $1 million in 15 years. For example, if you invested $2,000 per month into Palantir, you'd have to earn returns well above the market's historical average for the entirety of the 15-year period in order to end up with $1 million.
Here's why investors shouldn't expect Palantir stock to repeat its performance of the last two-and-a-half years well into the future.
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The company is firing on all cylinders
Palantir has seen its business accelerate after introducing its Artificial Intelligence Platform, or AIP. The platform allows anyone to use natural language to interact with Palantir's core software, making it more accessible, more efficient, and, in the right hands, more powerful. As a result, enterprise customers can expand their use of the software, which has led to strong uptake from U.S. commercial customers and bigger contract sizes.
That shows up for Palantir in its U.S. commercial revenue growth, which topped 70% last quarter. Combined with excellent growth in its U.S. government contracts, total revenue climbed 39% year over year in the first quarter of 2025, exhibiting rapidly accelerating growth.
The company doesn't invest heavily in marketing or sales, letting product improvements do the selling for it. Sales and marketing expenses climbed just 22% year over year, leading to operating margin expansion as it scales. Q1's operating margin came in at 44%, up from 36% a year ago.
NASDAQ: PLTR
Key Data Points
There appear to be more gains ahead, too. The company seems poised to win more government contracts under the Trump administration for things like immigration and border security, and greater defense spending. It could play an important role in the government's planned missile-defense system.
Management increased its full-year outlook for revenue by about 4% and its operating income by about 10% after releasing strong first-quarter results. So, the company sees a strong pipeline of growth coming over the rest of the year.
Can Palantir stock make you a millionaire?
While Palantir continues to put up staggering financial results, the biggest reason it will be difficult for the stock to outperform the market long term is its current valuation. The company's enterprise value is more than 80 times management's 2025 revenue outlook and 185 times analysts' estimates for 2025 EBITDA.
Even with the company's rapid revenue and earnings growth, that valuation is hard to justify. If Palantir's stock price went nowhere, it would still take years of growth for that multiple to come down to comparable levels with other leading enterprise software businesses.
This may be in the early innings of the AI revolution, but Palantir's stock price may have gotten ahead of reality. That was extremely evident after the company released its first-quarter earnings report. While the results were fantastic and management increased its revenue and earnings outlook for the year, the stock price still went down. When a stock trades at such a lofty valuation, anything less than an overwhelming beat and raise can cause its price to tumble.
And that's bad news for anyone hoping to earn similar returns from Palantir as the last two-and-a-half years. Any misstep, any government contract that doesn't materialize, any earnings report that comes in just as expected, can send the stock lower. Until the valuation comes down, there are likely better opportunities to buy as the basis for your future million-dollar portfolio. But as long as Palantir continues to execute well, it's worth keeping an eye on the stock to see if it presents an opportunity to buy shares at good value.
