Prediction: Palantir Will Be a Trillion-Dollar Stock by 2030

Despite the market's reaction to Palantir Technologies (NASDAQ: PLTR) Q1 results, it was one of the most impressive quarterly reports I've ever seen. The stock is now down more than 20% on the year, but I predict the company will become a trillion-dollar stock in the coming years. It currently has a market cap of less than $350 billion.

Let's dig into Palantir's Q1 results and why it looks poised to be a top artificial intelligence (AI) stock in the coming years.

Image source: The Motley Fool.

Palantir manages another blowout quarter

For the 11th straight quarter, Palantir's quarterly revenue growth accelerated, as it continues to see incredible momentum. During this stretch, its year-over-year growth rate went from 13% in 2023's Q2 to 85% last quarter, up meaningfully from the 70% growth rate it posted in Q4.

Its Q1 revenue of $1.63 billion also easily exceeded management's previous forecast of $1.532 billion to $1.536 billion. Adjusted earnings per share, meanwhile, rose from $0.12 to $0.33.

Data source: Palantir.

U.S. commercial revenue once again set the pace, fueled by rapid customer adoption and expansion of its Artificial Intelligence Platform (AIP). U.S. commercial revenue surged 133% to $595 million in the quarter, while U.S. commercial remaining deal value soared 112% to $4.92 billion. Meanwhile, it closed U.S. commercial deals worth $1.18 billion in total contract value in the quarter, a 45% year-over-year increase.

One of the most eye-popping metrics from Palantir's report was its net revenue retention, which measures revenue growth from existing customers that have been with the company for more than a year. This came in at an incredible 150%, showing how rapidly existing customers are expanding with Palantir. Meanwhile, it also continues to add new customers, with its U.S. commercial customer count climbing by 42% year over year and 8% sequentially. Its overall customer count rose 31% year over year and 6% sequentially.

On the government side of its business, revenue surged 76% year over year to $858 million. U.S. government revenue skyrocketed 84% to $687 million. International government revenue, meanwhile, rose by 51% to $172 million. Its international commercial segment has not been a high priority, but its revenue increased 26% to $179 million.

Looking ahead, Palantir projected Q2 revenue of between $1.797 billion and $1.801 billion, representing 79% growth at the midpoint. For the full year, it raised its revenue guidance to a range of $7.65 billion to $7.662 billion, up from a prior range of between $7.182 billion and $7.198 billion. That equates to 71% growth at the midpoint. It expects U.S. commercial revenue to rise by at least 120%, up from its prior outlook of at least 115%.

Why the stock has a trillion-dollar upside

Palantir is establishing itself as a vital part of the AI landscape through AIP. Its platform essentially serves as an AI operating system that allows organizations to use AI in the real world to generate actionable insights without the risks of costly AI hallucinations. This should only become more valuable as agentic AI gains more users.

The company's net dollar retention is a testament to the value Palantir's customers place on its solution. The huge growth from existing customers positions the company for the potential of 50%-plus revenue growth for many years to come. Meanwhile, it has a very tiny salesforce of only about 70 people, so there is plenty of room to accelerate new customer growth, as well. Palantir is not just growing its revenue rapidly; it's doing it in one of the most highly efficient ways possible.

If Palantir can grow its revenue at a 55% compound annual growth rate from 2027 to 2031, it would generate around $69 billion in revenue, which at a 15 forward price-to-sales (P/S) multiple gets the company to a trillion-dollar valuation by 2030.

Geoffrey Seiler 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.