Palantir Stock Is Up 1,000% in the Last 3 Years. Can It Hit $1 Trillion by 2030?

Core Insights - Palantir reported a 39% revenue growth to $883.9 million in Q1 2025, surpassing the consensus estimate of $862.1 million, marking its seventh consecutive quarter of revenue growth [1] - The company raised its full-year revenue guidance to $3.89 billion to $3.902 billion, indicating a projected growth of 36%, which is above the consensus of $3.75 billion [2] - Despite strong earnings, Palantir's stock fell approximately 12% due to concerns over its high valuation, with a price-to-sales ratio of 82.4 [2] Financial Performance - GAAP operating income more than doubled to $176 million, resulting in an operating margin of 20% [1] - Adjusted earnings per share increased from $0.08 to $0.13, aligning with estimates [1] Valuation Analysis - Palantir's stock has increased about 1,000% over the past three years, primarily due to a revaluation rather than underlying revenue growth [3][5] - Approximately two-thirds of the stock price increase is attributed to multiple expansion rather than actual business growth [5] - The current price-to-sales ratio suggests that investors expect Palantir to maintain or accelerate its growth rate for several years [5] Market Position - Palantir has a market capitalization exceeding $250 billion, making it one of the most valuable pure-play software companies in the U.S. [7] - Compared to peers like Salesforce and ServiceNow, Palantir's revenue growth is only about twice as fast, yet its valuation is over five times higher than its closest competitor [9] Future Growth Potential - Investors are assuming that Palantir will grow to at least $10 billion in revenue, necessitating a 40% growth rate for the next three years [10] - To reach a price-to-sales ratio of 25 by 2030, Palantir would need to achieve $40 billion in revenue, requiring a 60% growth rate over the next five years [13] - The company's ability to reach these targets is contingent on the growth of its total addressable market, particularly driven by AI adoption [12][14]