If You Had Invested $10,000 in Palantir at the Start of the Year, Here's How Much You'd Have Now

Key Points

• Palantir has seen revenue take off, particularly in its U.S. commercial business.

• This is as customers rush to get in on its AI-powered software to optimize their operations.

• 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) has been wowing investors quarter after quarter with its revenue growth and its stock price performance. The software company has seen sales take off in recent years as both government and commercial customers pile into its artificial intelligence (AI)-driven solutions. And the recent quarter showed that this momentum is going strong, with revenue reaching more than $1 billion.

This is fantastic, but it's also driven valuation to shocking levels: The shares traded for more than 100 times forward earnings estimates earlier this year and today have reached more than 200. And that has prompted many analysts to call the stock overvalued and recommend avoiding it.

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So now is a good time to consider the performance of Palantir stock in recent months -- and decide on what may lie ahead. To start, let's take a look at how much you would have now if you had invested $10,000 in Palantir shares at the start of the year.

Image source: Getty Images.

Taking a bullish stance on Palantir

Let's imagine you ignored the bears, took a bullish stance on Palantir, and decided to invest $10,000 in this player as of the first trading day of 2025. Though the stock has had its ups and downs this year, slipping in particular with the rest of the market this spring amid concern about the economy and potential U.S. tariffs on imports, it has gained more than 100% this year.

And considering this, your $10,000 investment would have doubled, reaching more than $20,700 as of the latest stock market close. That's an excellent return, with Palantir showing its strength as a growth stock.

But now you may be wondering whether this trend will continue, especially considering the stock's valuation. It's impossible to say that Palantir is cheap by traditional valuation metrics. Still, reaching these sorts of levels is a situation that's common for many technology players as they grow. It's important to keep in mind that forward price-to-earnings ratios, for example, look at earnings projections for the coming year -- but they don't reflect the earnings situation a few years down the road.

Palantir's recent earnings reports offer us reason to be optimistic about that path ahead and the long term. The company, in the past known mainly for its contracts with governments, still is seeing consistent double-digit growth in the government business. But, in addition to that, its commercial business is taking off as these customers flock to Palantir's Artificial Intelligence Platform. This platform, harnessing the power of AI, helps customers aggregate and optimize the use of their data -- this may not sound super exciting, but it actually can be a game changer for many.

From Fannie Mae to Citibank

For example, customer Fannie Mae says that through its work with Palantir it now can detect mortgage fraud in a few seconds versus two months, and Citibank says the customer onboarding process now takes seconds instead of several days.

Palantir chief Alex Karp even called the U.S. commercial business "the emerging core of Palantir" in his recent letter to shareholders. The number of U.S. commercial customers reached 485 in the latest quarter, up from about 14 just a few years ago. And contract value has been soaring in the triple digits quarter after quarter -- in the latest, U.S. commercial total contract value surged 222% to $843 million.

On top of this, Palantir has raised its full-year guidance for total revenue, U.S. commercial revenue, adjusted income from operations, and adjusted free cash flow.

As governments and businesses rush to apply AI to their projects, Palantir could continue to benefit for quite some time -- the AI market is forecast to reach more than $2 trillion early next decade, suggesting there is plenty of room for growth over the long term.

Considering all of this, could Palantir continue to supercharge your portfolio? It's impossible to predict near-term stock performance, and it's likely Palantir will dip from time to time. Stocks never rise in a straight line forever. But it's fair to say that thanks to Palantir's strength in the high-growth area of AI, the company is well positioned to continue delivering significant earnings growth -- and that means that over the long haul, this software player could score a win for investors.

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Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.