Hitting a home run requires perfect timing: Swing too soon -- or too late -- and you miss the ball entirely. Even if you do make contact, research suggests that a batter needs to launch the ball at between 25 and 35 degrees to hit a home run. Too high an angle results in a pop fly; too low likely means a ground-out.
Thankfully for investors -- who are investing in stocks, not hitting balls -- timing doesn't have to be perfect. You can hit an investing home run even if you're late to the party. With that in mind, let's take a closer look at Palantir Technologies (PLTR -1.43%) and why I think it can still set up investors for life.
Image source: Getty Images.
What Palantir has already achieved
First, we must start by acknowledging that Palantir stock has enjoyed an incredible run over the last few years.
Since Aug. 5, 2022, shares of Palantir have advanced by a mind-blowing 1,500% as of market close Aug. 11. That means an investment of $10,000 made three years ago would now be worth $160,000.
Furthermore, Palantir's market cap has exploded. In late 2022, it stood at around $12 billion. As of this writing, Palantir's market cap is $440 billion. That makes it the 18th-largest American company, right behind legendary energy giant ExxonMobil (market cap of $456 billion) and ahead of corporate titans including Bank of America ($342 billion), Coca-Cola ($303 billion), and AT&T ($201 billion).
In other words, perhaps the "easy" money has already been made when it comes to Palantir.
But it's important to remember that past performance doesn't tell you where a stock is going. That's why it's crucial to dig into Palantir's financials to understand the company's potential.
The AI revolution could carry Palantir's stock much higher
As impressive as Palantir's recent stock history is, the company may be just getting started. For proof, consider Palantir's most recent quarterly earnings report. It was an absurdly bullish report, highlighting several key factors.
- The company reported its first-ever $1 billion revenue quarter, with sales rising 48% year-over-year.
- Net income surged by 144% to $326 million.
- Total customer count skyrocketed by 43% from a year ago.
In short, Palantir's business is booming. Moreover, analysts continue to raise expectations of Palantir's future revenue, as it becomes clear that organizations are lining up for Palantir's AI-powered products.
According to estimates compiled by Yahoo! Finance, sell-side analysts now expect Palantir to generate $4.2 billion in revenue this year (the 12 months ending on Dec. 31, 2025), and $5.6 billion next year. That would represent year-over-year growth of 46% and 34%, respectively.
Granted, owning Palantir stock comes with certain risks. Valuation is one. The stock trades at a price-to-sales (P/S) ratio of 137. That's astronomical -- even for a tech stock. Most megacap tech stocks trade at a P/S ratio below 20; some are below 10. Therefore, Palantir's execution must remain flawless, or its stock price will suffer.
That said, the company continues to deliver fantastic growth with each quarterly report. Therefore, I still view the stock as worthy of consideration and think that even though the chances of one stock setting anyone up for life are slim, Palantir has mouth-watering potential. The AI revolution continues to pick up steam, and Palantir remains at the forefront.
