Palantir Technologies Soars in Stock Market Amid Analyst Optimism

Palantir Technologies(NASDAQ: PLTR) outperformed all other companies in the S&P 500(SNPINDEX: ^GSPC) last year, with shares soaring 340% thanks to increased interest in its artificial intelligence platform, AIP. This impressive performance has continued into 2025, with the stock gaining 49% as of February 11, once again placing Palantir in the top spot within the S&P 500.

Historically, Wall Street has held a skeptical view of Palantir. In December, the company was among the ten stocks in the S&P 500 facing the highest percentage of sell ratings. It also topped the list for being the most overvalued stock according to the gap between its current share price and median target price. However, recent events have shifted this sentiment dramatically.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Following Palantir’s fourth-quarter earnings report, many analysts have raised their earnings predictions and fair value estimates significantly. Dan Ives from Wedbush Securities has even suggested that Palantir could achieve a trillion-dollar valuation in the next few years.

Here are some of the key specifics.

Analysts Revise Earnings Forecasts and Fair Value Estimates Upward

Palantir’s fourth-quarter results not only met but exceeded Wall Street’s projections for both revenue and earnings. The company reported a 43% increase in its customer base, bringing the total to 711, while existing customers increased their spending by an average of 20%. Revenue rose 36% to reach $828 million, marking the sixth consecutive quarter of growth, and non-GAAP earnings surged 75% to $0.14 per diluted share.

Looking ahead, Palantir has provided guidance that is ahead of Wall Street’s expectations. Management anticipates that first-quarter revenue for 2025 will grow by 36% to $860 million, with projected total revenue for the year rising 31% to $3.7 billion. This positive outlook has prompted several analysts to revise their projections:

• Adjusted earnings per diluted share are expected to grow at an annual rate of 31%, reaching $0.70 in 2026. This forecast is now 21% higher than estimates made prior to the fourth-quarter report.
• The average target price for Palantir shares has climbed to $92.50, a 106% increase from just one month ago and a remarkable 182% rise from three months ago, as reported by LSEG.

Though the average target of $92.50 indicates a potential 17% drop from the current price of $112, Wall Street has historically underestimated Palantir. The company holds a strong position in the artificial intelligence platform sector, with only Microsoft holding a larger market share. Moreover, AI platform spending is expected to rise at an impressive annual rate of 40% through 2028.

Dan Ives Predicts Palantir Could Become a Trillion-Dollar Company

Dan Ives, an influential equity analyst and technology research head at Wedbush Securities, has been consistently optimistic about Palantir, despite the prevailing negative sentiment on Wall Street.

In August 2023, Ives referred to Palantir as “probably the best pure-play AI name” in the market. By March 2024, he characterized Palantir’s AIP product as a cornerstone for various AI applications. In December 2024, Ives suggested that Palantir could follow in the footsteps of Salesforce or Oracle, hinting at a possible massive increase in revenue.

However, his most daring prediction came after the company’s strong fourth-quarter performance. He estimated that Palantir might achieve a market cap of $1 trillion within two to three years, representing a staggering 300% rise from its current valuation of approximately $250 billion.

Image source: Getty Images.

Palantir’s Stock Valuation Remains High

Currently, Palantir stock has an extremely high valuation at 270 times its adjusted earnings. Such a multiple is considered overly expensive for a company projected to grow its earnings at a 31% annual rate through 2026. This value would still appear steep even if earnings were to increase at twice that rate.

Nevertheless, there are reasons to believe Palantir will grow in value over time. The company may indeed reach the ambitious trillion-dollar valuation posited by Dan Ives. Long-term investors interested in shares might consider starting with a small purchase, but they should recognize the risks of a sharp decline with any negative news.

In my opinion, patience is key. It could be wiser to wait for better entry points. Gradually building a position by acquiring a few shares during price drops may be prudent, provided the company’s fundamentals remain solid.

Is Investing $1,000 in Palantir Technologies a Good Idea?

Before investing in Palantir Technologies, take a moment to evaluate this:

The Motley Fool Stock Advisor analyst team has recently identified what they consider the 10 best stocks to buy now, and Palantir Technologies did not make the list. The stocks that were chosen are expected to provide significant returns in the coming years.

Consider that when Nvidia was selected on April 15, 2005… your $1,000 investment at their recommendation would now be worth $813,868!*

Stock Advisor offers a straightforward approach for investors, including advice on constructing a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the returns of the S&P 500 since 2002*.

Learn more »

*Stock Advisor returns as of February 7, 2025

Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends Microsoft, Oracle, Palantir Technologies, and Salesforce. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.