An investment of $1,000 in shares of Palantir Technologies (PLTR +2.37%) five years ago is worth just over $5,500 as of this writing, though it is worth noting that a significant chunk of the stock's gains came in 2024 and 2025.
Palantir's stock hit a purple patch during these two years. Investors were buying the stock hand over fist as the adoption of the company's artificial intelligence (AI) software platform supercharged its growth. Specifically, Palantir stock soared a whopping 935% in 2024 and 2025. However, it has hit a rough patch in 2026, losing 24% of its value so far.
Ideally, investing in this AI stock right now may not seem like the right move due to its valuation. But I think that it remains a solid long-term investment despite its poor performance this year. It won't be surprising to see Palantir's shares stepping on the gas once again, making investors significantly richer over the next five years.
Let's see why that may be the case.
Image source: The Motley Fool.
Palantir Technologies is dominating the fast-growing AI software platforms space
Palantir's Artificial Intelligence Platform (AIP) helps organizations connect their proprietary data and operations with AI models. Doing so allows Palantir's customers to securely automate operations, make real-time decisions with AI, and eliminate redundancies. Organizations can reduce costs, increase sales, or streamline their operations using Palantir's AIP.
NASDAQ: PLTR
Key Data Points
The gains fueled by AIP adoption have helped Palantir record phenomenal growth in its customer base since the platform was launched in April 2023. The company's total customer count was 391 at the end of the first quarter of 2023, and its revenue growth during the quarter was just 18%. Another point worth noting is that Palantir had only 8 contracts worth $10 million or more in Q1 2023.
For comparison, the number of $10 million-plus contracts jumped to 47 in the first quarter of 2026. The company's overall customer count jumped to 1,007, and its revenue growth accelerated to 85%. Another notable point is that Palantir's total contract value (TCV) increased by 61% year over year in Q1 2026 to $2.4 billion. That's well above the $397 million TCV it reported in Q1 2023, before AIP was launched.
So, it is quite clear that AIP has transformed Palantir's business. The bigger contracts, the growing customer base, and the secular growth opportunity in the AI software platforms space have supercharged the company's margins and bottom line.
Data by YCharts
The good news for investors is that the AI software platforms market that Palantir serves is poised to grow at a healthy pace over the long run. According to one estimate, the generative AI software platforms market was worth just $19 billion in 2024. Palantir reported a 29% increase in revenue in 2024 to $2.9 billion, indicating that it controlled just over 15% of this market.
However, Palantir's growth rate has accelerated, as evidenced by its Q1 revenue growth. This is precisely why I believe that this AI stock could deliver substantial gains by 2030, as it is becoming more dominant in a highly lucrative market.
How much upside can investors expect by 2030?
The generative AI software platforms space is forecasted to clock an annual growth rate of 29% through 2034, according to a third-party estimate. Palantir's revenue, meanwhile, is projected to almost double this year to $7.72 billion. What's more, Palantir's remaining deal value (RDV), which is the total value of contracts yet to be fulfilled at the end of a quarter, almost doubled in Q1 to $11.8 billion.
Palantir, therefore, has a robust revenue pipeline, which should ensure that its phenomenal growth continues over the long run. Assuming Palantir's revenue increases at an annual rate of 50% between 2026 and 2030, given its growing share of the AI software platforms market, its top line could reach $39 billion after five years (using this year's estimated revenue of $7.72 billion as the base).
If this growth stock trades at 15 times sales at that time, a significant discount to its current price-to-sales multiple of 62, its market cap could jump to $585 billion. That suggests potential upside of 92% compared to its current market cap. However, I won't be surprised to see Palantir delivering bigger gains than that, as its above-average growth should ideally be rewarded with a premium valuation.
So, it would make sense for Palantir investors to continue holding this growth stock over the next five years, as it could emerge from its recent slump and soar higher.
