This Artificial Intelligence (AI) Stock Has Doubled in 2025 -- Can It Keep Climbing?

Core Viewpoint - Palantir has experienced significant growth in 2025, with its stock doubling, but has recently faced a decline of nearly 15% from its peak, prompting discussions about potential buying opportunities [2][9]. Company Performance - Palantir's customer base is expanding rapidly, particularly in the U.S., where the commercial customer count rose 64% year over year to 485, and U.S. commercial revenue increased 93% to $306 million in Q2 [6]. - The government segment is also performing well, with government revenue rising 49% year over year to $553 million, outpacing the global commercial business, which grew 47% to $451 million [8]. Market Position - Palantir's services are expensive, with an average annual spend of $2.5 million per customer, indicating a focus on larger businesses and a significant potential for growth given its relatively small customer base [7]. - Despite the strong growth, Palantir's stock is trading at a high valuation, with a forward earnings multiple of 241 and a price-to-sales ratio of 115, which are significantly above typical benchmarks for the industry [10][12]. Growth Potential - The company has substantial room for expansion, as its current customer base of 485 is small compared to the potential market, suggesting many businesses could become clients in the future [7]. - However, achieving sustained high growth rates may be challenging, as even a 50% compound annual growth rate over the next three years would still leave the stock expensive at a P/S ratio of 32 [13].