Shares of Palantir Technologies (PLTR 3.05%) have shed nearly 34% of their value since hitting a 52-week high in early November. However, the stock roared back into form after the company released its fourth-quarter results on Feb. 2, jumping nearly 7% in the next session.
It is worth noting that Palantir's expensive valuation has contributed to the drag on the stock in recent months. However, the stellar results it has delivered and the guidance management offered make it clear that there is more to the company than just its lofty valuation.
It won't be surprising to see the stock go on a more extended bull run after its Q4 report. In fact, a closer look at how Palantir is capitalizing on the fast-growing artificial intelligence (AI) software market suggests the stock could deliver healthy gains over the next five years.
Let's look at the reasons why this tech stock is built for more upside.
Image source: Getty Images.
Palantir's improving growth rate suggests that it is becoming a bigger player in AI software
Palantir's revenue in the fourth quarter increased by 70% from the year-ago period to $1.4 billion. Importantly, the company's growth accelerated significantly in each quarter of 2025, driven by the improving adoption of its AI tools that help its clients boost productivity.
NASDAQ: PLTR
Key Data Points
Buoyed by the proficiency of its AI platform, Palantir didn't just attract new customers -- it also won more business from existing accounts. The company claims that new customers deploying its AI software solutions for specific uses eventually opt for enterprisewide deployment to harness the benefits of AI. Management cited several examples of this trend on the latest earnings conference call.
The fact that Palantir is winning more business from its established customers over time is also boosting its margins. Its adjusted operating margin jumped by an impressive 12 percentage points year over year in Q4 2025 to 57%. As a result of all of this, Palantir experienced outstanding growth throughout 2025.
|
Period |
Revenue |
Growth (YOY) |
Earnings Per Share |
Growth (YOY) |
|---|---|---|---|---|
|
Q1 2025 |
$884 million |
39% |
$0.13 |
62.5% |
|
Q2 2025 |
$1.004 billion |
48% |
$0.16 |
78% |
|
Q3 2025 |
$1.181 billion |
63% |
$0.21 |
110% |
|
Q4 2025 |
$1.407 billion |
70% |
$0.25 |
79% |
Data source: Palantir Technologies. YOY = year over year.
The good news for investors is that Palantir anticipates that its outstanding growth will continue. The company has guided for almost $7.2 billion in revenue for 2026, which would be a 61% jump over last year. However, Palantir could easily coast past that estimate.
The company ended 2025 with a 105% increase in remaining deal value to $11.2 billion. That metric is for the total value of contracts the company has signed but has yet to fulfill, and in this case, it's much greater than the revenue management is forecasting for 2026.
Moreover, the customers that Palantir has added in recent quarters could further inflate its remaining deal value. As of the end of Q4, its overall customer count was up by 34% year over year to 954. There is a chance the company's revenue pipeline will improve throughout the year as these 243 new customers could expand their adoption of its AI software platform.
This could pave the way for stronger-than-anticipated growth in both revenue and earnings. Another important point to note is that even though analysts have raised their growth expectations for Palantir for the next three years, their targets seem conservative.
PLTR Revenue Estimates for Current Fiscal Year data by YCharts.
I say this because, according to a forecast by the researchers at MarketsandMarkets, between 2025 and 2030, the AI software platform market will grow by more than 400%. According to the firm's estimate, the AI software platform market generated just over $18 billion in revenue last year. If that's accurate, Palantir's revenue of $4.48 billion means that it controlled about a quarter of this fast-growing space.
Even better, the 2026 forecast indicates that Palantir is poised to exceed the annualized growth rate of 39% that the AI software platform market is anticipated to clock over the next five years. If it can achieve and maintain that level of outperformance, it could become a much bigger player in this lucrative niche.
The next five years could make Palantir investors richer
The points discussed above suggest that Palantir can outpace Wall Street's growth expectations significantly through 2030. That's probably why analysts are expecting a slight acceleration in its revenue growth to 40% in 2028 as compared to 38% in 2027.
But as the company is winning a bigger share of the AI software platform space, it won't be surprising to see its top line growing at a 50% rate in the long run. If that's indeed the case, Palantir's revenue could jump to almost $37 billion in 2030 (using 2026's estimated revenue as the base).
Assuming Palantir stock trades at even 20 times sales at that time, based on that figure, its market cap would be $740 billion -- 128% higher than it is today. So, Palantir could soar past $300 by 2030 from its current stock price of just under $140.
The sales multiple assumed above is a massive discount to Palantir's current price-to-sales ratio of 78, which means that this AI stock could deliver robust gains in the long run even if its valuation declines significantly.
