Artificial intelligence (AI) is emerging as the defining technology of the 2020s. That's not surprising given the remarkable productivity gains it is poised to deliver.
Market research firm IDC estimated last year that each dollar spent on AI solutions is likely to generate $4.90 in value to whoever invested. PwC estimates that AI could increase global gross domestic product (GDP) by 15 percentage points by 2035.
All this forecasted growth helps explain why customers have been aggressively adopting Palantir Technologies' (PLTR 6.83%) generative AI software platform, supercharging its stock price in the process.
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AI-led productivity gains are fueling Palantir's growth
It has been just under three years since Palantir released its Artificial Intelligence Platform (AIP) to help its federal and commercial customers connect their private data with large language models (LLMs) to leverage the benefits of AI. The platform has been helping customers improve their productivity at a terrific pace.
For instance, Palantir management points out that it reduced the planning process of a shipbuilder from 160 hours to just 10 minutes, while the material review of a shipyard was reduced from "weeks to less than an hour." This is just one of the several instances in which Palantir's AIP is helping customers unlock value.
Not surprisingly, Palantir is attracting new customers at a terrific pace. Its customer count increased by 34% year over year in Q4 2025 to 954. More importantly, AIP is helping Palantir land bigger contracts from existing customers. The company closed $4.3 billion worth of contracts last quarter, up by 138% from last year.
That was nearly double Palantir's 70% year-over-year revenue growth last quarter to $1.4 billion. The incredible growth in Palantir's contract value is why its remaining deal value (RDV) -- the total value of contracts yet to be fulfilled at the end of a period -- more than doubled to $11.2 billion last quarter.
As the company's new customers tend to expand their deployment of AIP in their operations to boost productivity and reduce redundancy, don't be surprised to see Palantir's revenue pipeline and growth rate improving further.
NASDAQ: PLTR
Key Data Points
The valuation shouldn't be a concern
Palantir stock is an early winner of the AI revolution. Its share price shot up 1,700% in the past three years, suggesting that it has been an early winner from the technology's proliferation. As a result, it is now trading at a whopping 340 times earnings, which is nearly 10x the tech-heavy Nasdaq-100 index's earnings multiple.
However, investors looking to buy an AI stock for the next decade should consider looking past the valuation. Palantir's ability to attract new customers and extract more business from existing ones has led to a phenomenal acceleration in its earnings growth. The company's non-GAAP earnings jumped by 83% in 2025 to $0.75 per share, better than the 64% growth it clocked in 2024.
Palantir's bottom-line growth can continue accelerating in 2026. It can maintain solid growth levels over the next decade as AI adoption improves and the technology's contribution to the global economy becomes bigger due to its productivity gains, making Palantir a top AI stock to buy and hold for the long run.
