Shares of artificial intelligence (AI) software company Palantir Technologies (PLTR +10.32%) have been one of the great trades of the past few years. The stock climbed more than 20-fold from the end of 2022 through its 2025 highs as enterprises and governments rushed to put AI to work inside their operations. But 2026 has been a different story. Shares are down 36% so far this year, recently touching a new 52-week low of $112.25 -- well off the $207.52 they hit within the past year.
So where could the stock realistically be in five years?
The business momentum makes a strong case for optimism. But the valuation makes the case for caution.
The result? An unusually wide range of possible outcomes.
Image source: Getty Images.
Incredible growth
Start with what's going right, because plenty is.
Palantir's revenue rose 85% year over year in its first quarter of 2026 (the period ended March 31, 2026) to $1.63 billion. That was an acceleration from 70% growth in the fourth quarter of 2025 and 63% in the third quarter. For a company already generating billions in annual sales, this is an extraordinary pace.
Powering this growth is its Artificial Intelligence Platform, or AIP -- the product that lets organizations build AI directly into their day-to-day workflows.
U.S. commercial revenue, where AIP adoption is most evident, surged 133% year over year in the first quarter to $595 million. And the government side grew too, with U.S. government revenue up 84% to $687 million.
Further, Palantir reported first-quarter GAAP net income of $871 million -- a 53% margin.
Looking ahead, the expectation is for more staggering growth. In its last quarterly update, management raised its full-year 2026 revenue guidance to about $7.66 billion at the midpoint, which would represent 71% growth.
"The United States remains the center, the constant core, of our business," said co-founder and CEO Alex Karp in the company's first-quarter shareholder letter. "And that business is erupting." Karp has gone further, telling CNBC he expects Palantir's U.S. business to double again in 2027.
The valuation asks for near-perfection
Here's the catch. Even after a 36% decline this year, the stock is priced for a future that has to go almost exactly right.
At about $116, Palantir trades at 128 times earnings. That is an extreme multiple for any company, and it only makes sense if growth at a pace close to today's continues for years. Clearly, the market isn't paying for the business Palantir is today. It's paying for the business it might be in 2031 and beyond.
But there are two significant risks.
First, there's the same risk all software companies are facing right now: AI. Despite Palantir being an AI-first company, many investors worry that AI will become so powerful that it will lower the barriers to entry for AI tools, allowing new upstarts to more easily compete with software incumbents.
The second risk is the government business, which can be lumpy and political. In June, the U.S. Army named privately held Anduril -- not Palantir -- to lead the common data layer for its Next Generation Command and Control program, with Palantir's Foundry contributing as one component.
Overall, Palantir's business may well keep compounding at an impressive rate. But the stock's high valuation may already price in the most optimistic bull case for the stock -- a bad setup when the company faces competitive pressures that could slow its growth over time.
NASDAQ: PLTR
Key Data Points
So, where does the stock go from here?
The wide range of outcomes makes a precise call impossible, but I don't think the likeliest paths are especially bullish. If Palantir keeps growing its business while that valuation multiple slowly compresses over the next five years, I think the stock could end up somewhere between roughly where it sits today or compounding at a modest rate of about 5% annually at best. Starting from about $114, 5% annual compounding works out to around $146 in five years.
In short, I wouldn't expect much from the stock. But that doesn't mean the stock has let investors down. It's up more than 300% over the past five years.
