Palantir Technologies (PLTR 2.43%) is probably the hottest stock on Wall Street. As of this writing, shares are up 51% year to date and more than 380% over the last 12 months.
So, where will Palantir shares be in one year? Let's dig into the numbers and see what's possible.
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A $260 billion market cap -- and counting
First things first, Palantir shares have been on an incredible ride.
NASDAQ: PLTR
Key Data Points
Indeed, one year ago, I argued that "Palantir is a great company and a solid investment, [but] I don't think it has what it takes to cross the very high hurdle of $1 trillion by 2035."
When I wrote that, Palantir had a market capitalization of about $58 billion. As of this writing, it's over $260 billion -- and counting. That amounts to more than a fourfold return in less than one full year.
In other words, at that rate, Palantir would crack the $1 trillion mark in about one more year.
Needless to say, that seems overly optimistic, even for Palantir bulls like myself. Nevertheless, there's a reason why the company's stock has been skyrocketing: The company is on a path to something big.
Here's what it is.
Palantir could become the "Windows" of the AI revolution
Consider this: In the 1980s, personal computers were the great technological innovation. Almost everyone could see they were a big leap forward, but one question remained: Which operating system would emerge as the standard for the personal computer industry?
Apple had the Macintosh with its own proprietary operating system; many other companies offered their own systems with various bells and whistles.
Yet, one company ultimately came to dominate the space -- Microsoft, with its Windows operating system.
The lesson?
Artificial intelligence (AI) today could be analogous to personal computers in the 1970s and 1980s. Today, the question is which company will develop the software that most elegantly harnesses the power of AI technology.
There will be plenty of winners. Sure, Microsoft won the first great battles in the personal computing wars, but others, like Apple, eventually recovered and delivered massive gains for its shareholders.
I believe Palantir could represent one of the first great AI software companies, a field which I expect to grow rapidly in the coming years. That's because AI -- along with robotics -- is poised to change the way organizations operate. Every aspect of operations, from logistics to customer service, even personnel management, can be improved with the aid of AI systems that will work 24 hours a day, 7 days a week.
As a result, expect more blowout earnings reports like the one Palantir just delivered.
For the three months ending on Dec. 31, 2024, the company reported:
- A 43% growth in overall customers, year-over-year.
- 36% revenue growth from a year earlier, with 52% growth in the U.S. overall and 64% year-over-year growth in the U.S. commercial market
- 63% adjusted free cash flow margin.
In short, the company's financial metrics are surging, as you would expect from a leader within a cutting-edge field. Investors should pay attention. While Palantir's run thus far has been impressive, the stock could have legs for many years to come.
