Palantir Stock Has Soared 2,710% Since 2023. A Wall Street Analyst Says This Will Happen Next (Hint: It May Shock You).

ChatGPT reached 100 million users just two months after its launch in late 2022, making it the fastest-growing consumer application in history. The chatbot showcased the power of large language models (LLMs) and effectively kick-started the artificial intelligence (AI) revolution.

Palantir Technologies (NASDAQ: PLTR) has been one of the biggest winners. The stock has advanced 2,710% since January 2023.

Despite concerns about valuation, Dan Ives at Wedbush Securities says the company will be worth $1 trillion within three years. That implies 130% upside from its current market value of $430 billion.

Is Palantir stock worth buying?

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Bulls argue: Palantir is a leader in artificial intelligence and machine-learning software

Palantir initially developed data analytics software for government agencies like the FBI, CIA, and Department of Defense. The company gradually adapted its software for use cases across various commercial industries and more recently introduced an artificial intelligence platform called AIP. That product is a large language model orchestration tool that lets developers build generative AI into workflows and applications.

Analysts have praised Palantir for AIP. Dan Ives recently told CNBC, "It's the gold standard when it comes to AI use cases." And Forrester Research last year recognized Palantir as a technology leader in artificial intelligence and machine learning platforms, awarding AIP higher scores based on its current capabilities than similar tools from Alphabet's Google, Amazon Web Services, and Microsoft Azure.

That puts Palantir in an enviable position. Grand View Research estimates spending on AI platforms will grow at 38% annually through 2033, driven by particularly rapid adoption in industries like healthcare, finance, manufacturing, and retail. Palantir is executing on that opportunity. Third-quarter revenue increased 63% to $1.1 billion, the ninth-consecutive acceleration.

Bears argue: Palantir is one of the most expensive software stocks in history

The problem with Palantir is its valuation. The stock trades at 140 times sales, which is the most expensive multiple in the S&P 500, several times over. The next closest contender is AppLovin, at 40 times sales. That means Palantir could lose 70% of its value and still be the most expensive stock in the index.

Creative Planning analyst Charlie Bilello earlier this week wrote, "Palantir traded at over 240x forward earnings at yesterday's close, the highest valuation for a company of its size ($491 billion market cap) in history." That multiple is simple unsustainable, so many Wall Street analysts anticipate major losses for shareholders.

Rishi Jaluria at RBC Capital recently set his target price at $50 per share, which implies 72% downside from its current share price of $180. "We cannot rationalize why Palantir is the most expensive name in our software coverage," he wrote. Similarly, Brent Thill at Jefferies recently set his target price at $70 per share, implying 61% downside.

Palantir CEO Alex Karp, known for controversial comments, criticized skeptics earlier this week. "I'm sorry short sellers can't tell the difference between products that work and products that don't," he told CNBC. However, that remark conflates quality software with valuation. Even the best software stock in the world is not worth buying at any price.

Palantir is unlikely to achieve a trillion-dollar market value within three years

Wedbush analyst Dan Ives has followed the technology sector for more than two decades, and his consistently bullish stance on Palantir has so far paid off. But I'm highly skeptical about Palantir becoming a $1 trillion company within three years.

That outcome is possible if the valuation multiple continues to stretch. However, the risks outweigh the potential benefits, so investors hoping to profit from the AI revolution should look elsewhere until Palantir shares trade at a much more reasonable price.

Trevor Jennewine has positions in Amazon and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Jefferies Financial Group, Microsoft, and Palantir Technologies. 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.