Investors in Palantir's stock have received noteworthy updates and a substantial valuation projection of $1 trillion from financial analysts on Wall Street.
Palantir Technologies, ticker symbol PLTR, soared 340% in 2025 to become the best-performing stock in the S&P 500. This remarkable rise continued into 2025, with a further 49% increase, pushing Palantir back to the top of the S&P 500 rankings. Despite a past of persistent bearish sentiments from Wall Street, things have drastically shifted in just two weeks.
Since Palantir's impressive fourth-quarter results, analysts have radically adjusted their earnings forecasts and fair value estimates. One notable analyst, Dan Ives from Wedbush Securities, even suggested that Palantir could become a trillion-dollar company in the near future.
Here's what you need to know:
Analysts hike estimates after a strong Q4 report
Palantir's Q4 financials exceeded expectations on both revenue and earnings, with a record customer count of 711 and an increase in the average existing customer spend of 20%. Revenue grew by 36% to reach $828 million, and non-GAAP earnings increased by 75% to $0.14 per diluted share.
The company also delivered optimistic guidance, with estimates of a 36% revenue increase in Q1 2025 and a full-year revenue surge of 31%. Unsurprisingly, these strong signals resulted in numerous analysts revising their earnings forecasts and fair value estimates:
- Analysts now anticipate an adjusted earnings growth of 31% annually, with a projection of $0.70 per diluted share in 2026. This is a staggering 21% increase (in dollar terms) compared to the previous estimates.
- The average 12-month target price for Palantir stands at $92.50 per share, representing a significant jump of 106% from one month ago and 182% from three months ago.
Though this average target price seems optimistic, given the current share price of $112, it's important to remember that Wall Street has historically underestimated Palantir's potential.
Palantir's strong presence in the artificial intelligence platform market and the rapid growth of investing in AI platforms support optimistic long-term projections.
Ives predicts a $1 trillion market cap within years
Dan Ives, the senior equity analyst and global head of technology research at Wedbush Securities, has been consistently bullish on Palantir despite widespread skepticism from his peers. In recent pronouncements, Ives praised Palantir's AI-driven analytics and its potential as a "launchpad of AI use cases."
In an audacious prediction, Ives claimed that Palantir could reach a $1 trillion market cap within two or three years, implying an impressive 300% increase from its current market value of $250 billion.
However, the stock is still costly
Despite its remarkable growth, Palantir's stock remains pricey. As of early 2025, the stock trades at 270 times its adjusted earnings, a valuation that's challenging for a company expected to grow earnings at 31% annually over the next six years.
Even with an aggressive earnings growth rate of 60% per year, the stock's current valuation would still be excessive. However, exceptional companies sometimes defy traditional valuation wisdom, especially in rapidly growing sectors like AI.
So, is it a good time to buy?
Investors should approach Palantir with caution. While the company's long-term prospects look promising, its current valuation is steep. A prudent strategy for enthusiasts might be to wait for better buying opportunities, purchasing a few shares gradually when the stock dips.
There's no denying that Palantir is a powerful force in the AI sector, and its growth trajectory looks impressive. However, smart investors should avoid making hasty decisions and consider the risks involved. The stock may be volatile, as it has demonstrated in the past.
In light of the strong Q4 financials and bullish predictions, several analysts have revised their earnings forecasts and fair value estimates for Palantir, with one analyst, Dan Ives, suggesting a potential trillion-dollar market cap for the company in the near future. With a current market value of $250 billion, this implies an impressive 300% increase.
Given Palantir's impressive performance and growing presence in the AI platform market, many investors are considering whether it's a good time to buy. However, the stock still carries a high valuation, trading at 270 times its adjusted earnings, making it a costly investment despite the company's expected earnings growth of 31% annually.
Therefore, investors might consider waiting for better buying opportunities or purchasing a few shares gradually when the stock dips, as the stock can be volatile and carrying such a high valuation comes with inherent risks.