Palantir Technologies (PLTR +3.16%) soared in recent years -- more than 2,000% over the past three, to be exact -- as revenue and demand for its software took off. Though the company has been around for more than two decades, its growth story actually may be just beginning. This is because Palantir is involved in the newish technology of artificial intelligence (AI).
Some analysts and investors have worried about Palantir's valuation, as it's climbed to high levels, but even if this or other factors put the brakes on Palantir stock, such a trend is likely to be temporary. Here's why Palantir may continue to climb -- and might even be a multimillionaire-maker over time.
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The reason for Palantir's success
First, it's important to understand why the company has been successful so far. As mentioned, Palantir isn't a young start-up -- it's been around for many years and has spent that time developing its technology and growing revenue. Palantir's software systems help its customers aggregate and analyze their data so they can use their findings to solve problems, drive innovation, and more.
In its earlier days, Palantir mainly served government customers, but over the past few years, its commercial business has exploded higher. So, today, the government and commercial units are driving revenue -- in the latest quarter, the U.S. government business delivered double-digit growth, while the U.S. commercial business generated triple-digit growth.
Why have commercial customers piled into Palantir in recent times? This coincides with Palantir's launch a couple of years ago of its Artificial Intelligence Platform (AIP), a system that allows customers to immediately make use of AI. So, customers don't have to start from scratch and build an AI system in-house to suit their needs -- instead, they can rely on AIP to deliver a use case specifically suited to their operations in a matter of hours.
NASDAQ: PLTR
Key Data Points
A trillion-dollar market
And this is why Palantir's earnings and stock price could march higher in the coming years. The AI market is expected to reach into the trillions of dollars by early next decade -- and the demand cloud service providers and chip designers are seeing now for AI products and services supports this forecast. As I mentioned, Palantir's AIP makes it easy for companies and governments to apply AI to their problems -- and generate results fast. This should keep demand for AIP going strong.
On top of this, Palantir's financial strength should allow it to continue to develop its technology and deliver very satisfying results to shareholders. The company has done an excellent job of balancing growth and profitability -- and I would expect this to continue.
All of this means that Palantir stock, even if it takes a dip or stagnates here and there, has what it takes to climb over the long run -- and Palantir, along with a diversified group of quality stocks, might even boost your portfolio to the multimillion-dollar level.
