Prediction: This Will Be Palantir's Stock Price by 2030

Palantir (NASDAQ: PLTR) has been one of the best-performing stocks of the AI investing era. If you had the foresight to invest $10,000 in Palantir at the start of 2023 and hold on, your stake would now be worth more than $200,000. However, Palantir's stock has shown a lot of weakness lately and is down more than 30% from the all-time high it set in October.

The question many investors are wondering is whether this is a short-term correction or a more profound shift. As a long-term investor, I don't really care what a stock's price will do in one year; I'm looking for multiyear returns. So if I'm considering buying a stock now, I'm projecting what I expect its 2030 price to be, then calculating whether the implied level of annualized returns would make it a worthwhile investment.

Viewed in that light, is Palantir a stock that's worth buying today?

Image source: The Motley Fool.

Providing AI to businesses and governments alike

Palantir's success can be traced to its dominance in the artificial intelligence industry. It got its start by developing AI-powered data analytics software for intelligence agencies and defense departments. Eventually, it adapted its software for civilian uses in the corporate world, where it also built a strong following. It was a solid business, but Palantir really transformed when generative AI arrived, and it positioned itself as a practical way to deploy AI in businesses of all kinds. Additionally, it offered a way to create AI agents for its AIP software package. This ignited Palantir's growth, and the company hasn't looked back since.

Palantir's growth rate since 2023 has been remarkable, especially because it has accelerated nearly every quarter.

PLTR Revenue (Quarterly YoY Growth) data by YCharts

But what will its revenue growth rate be over the next few years?

To justify its stock price, Palantir's steep growth must continue

For 2026 and 2027, Wall Street analysts project 71% and 45% growth, respectively. Projecting beyond that is difficult, but let's give Palantir the benefit of the doubt and assume a 40% annualized growth rate for 2028 through 2030.

If Palantir achieves that, its revenue will be $30.4 billion in 2030. That's not an outlandish projection, as Salesforce (NYSE: CRM), one of the most widely used enterprise software platforms, currently has a trailing 12-month total revenue above $40 billion. Given how vital AI agents are becoming to business operations, this revenue figure could easily come to fruition.

During its latest quarter, Palantir posted a jaw-dropping net income margin of 53%. That places it among the best in the business, but we'll project that its margins get slightly compressed since there will likely be competing products from other AI firms. If we project a long-term profit margin of 50%, then Palantir's net income at the end of 2030 will be $15.2 billion.

Now, what would be a reasonable price-to-earnings ratio for a top software company with an impressive profit margin and rapid growth? There are few companies one can directly compare Palantir to, and although it's a different industry, I think Nvidia (NASDAQ: NVDA) is the only fair comparison. Currently, Nvidia is priced at 45 times trailing earnings, which is probably a bit expensive for a long-term valuation. I think a somewhat more conservative 40 times earnings would be a fair price for Palantir's stock.

At 40 times earnings and $15.2 billion in net income, that would indicate a company with a market cap of $608 billion. For reference, Palantir's market cap is currently $328 billion. To reach $608 billion by the end of 2030 would require it to put up a compound annual growth rate of about 15% -- a market-beating result, based on the historical average of around 10% that the S&P 500 has delivered. That would, by the way, give Palantir's stock a $254 price tag.

That may make it seem like a no-brainer buy, but there are a lot of bullish projections already baked into the stock price. If it falls short of those expectations, it could easily prove a poor investment from here. I still think Palantir could outperform the market over the next few years if its ludicrous growth rate continues. If it doesn't, though, then investors will be better off looking for other potential AI winners.

Keithen Drury has positions in Nvidia and Salesforce. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Salesforce. The Motley Fool has a disclosure policy.