If You'd Invested $10,000 in Palantir Stock 3 Years Ago, Here's How Much You'd Have Today

Key Points

• An investment in Palantir three years ago has trouned the broad market.

• The U.S. private sector is currently Palantir's fastest-growing segment.

• The stock has become the most expensive in the S&P 500.

• 10 stocks we like better than Palantir Technologies ›

For the past three years, no other topic has taken over the technology and business worlds quite like artificial intelligence (AI). Although AI has been around for a while, recent advances and the public availability of generative AI tools like ChatGPT have brought it to the mainstream.

Many companies have seen their stock prices surge along with the interest in this technology, but Palantir (NASDAQ: PLTR) has emerged as one of the biggest beneficiaries of this tailwind. Had you invested $10,000 in Palantir stock three years ago (using Aug. 26, 2022, as the start date), your investment would be worth over $202,500 as of the market close on Aug. 26.

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Data by YCharts.

Why has Palantir stock surged so much recently?

Aside from the broader AI-fueled hype that has boosted tech stocks, investors have largely gravitated to Palantir because of the success of its Artificial Intelligence Platform (AIP). Historically, Palantir's software catered to U.S. military and intelligence agencies, but the release of AIP has quickly expanded its reach with commercial clients as well.

In the second quarter, Palantir reported its first billion-dollar-revenue quarter, and its U.S. commercial business was the fastest-growing segment. U.S. government revenue still accounted for the largest piece of the top line (42%), but U.S. commercial revenue grew 93% year over year to $306 million.

While the company continues to wow investors with each passing quarter, its skyrocketing share price has made it the most expensive large-cap stock in the S&P 500, on both a price-to-sales and price-to-earnings basis. At these levels, investors should think twice before putting a lump sum into the stock to chase the current momentum. However, if you're a long-term investor who can handle the volatility around Palantir, dollar-cost averaging can be a solid approach to take.

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Stefon Walters 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.