Will Palantir Technologies Be a Trillion-Dollar Stock by 2030?

Source The Motley Fool

The $1 trillion club is elite. As of this writing, only six American companies boast a market cap greater than $1 trillion: Apple, Microsoft, Nvidia, Alphabet, Amazon, and Meta Platforms.

Yet, looking ahead a few years, other companies are likely to join the club.

So, what about Palantir Technologies (NYSE: PLTR), a company at the forefront of the artificial intelligence (AI) revolution? Could it ride its recent stock market rally all the way to a $1 trillion valuation?

Let's dig in and see.

A green stock chart on a black background.

Image source: Getty Images.

What does Palantir do?

First, in order to understand why Palantir could reach a $1 trillion valuation, you must grasp what the company does.

In the simplest terms possible, Palantir is a problem-solving company. Every day, the world produces an incalculable amount of data. This data can be a powerful asset, particularly to the organizations that produce it, but its sheer volume often makes it difficult to parse and understand.

Take a hospital, for example. On any given day, a hospital might admit hundreds of patients, collect millions of data points, and schedule thousands of work hours for doctors, nurses, and other staff.

Palantir, through its AI-powered platform, seeks to provide clarity to clients at large organizations such as hospitals. By using the company's platform, staff members can identify patterns and develop solutions that deliver better outcomes to all stakeholders.

For example, Britain's National Health Service (NHS) used Palantir's technology to help improve its efficiency and thereby reduced patient waiting times for surgery.

Delivering these improvements can save large organizations lots of money. Because of that, Palantir is seeing its customer count explode. In its most recent quarter (the three months ending on June 30, 2024), the company's customer count jumped by 41% from a year ago. While Palantir previously focused on government contracts, its push into the private sector is taking off with U.S. commercial customers up 83% year over year.

In short, over the next five years (and longer), organizations will continue to implement AI-powered solutions to help improve their operations and save money. Palantir stands to benefit, and that's why its stock is up 129% year to date and could rise much higher over the next five years.

Can Palantir grow to a $1 trillion company?

Next, let's examine how large Palantir already is. As of this writing, the company has a market cap of $89 billion. So, for Palantir to reach a market cap of $1 trillion, its valuation would need to increase about 11-fold. In other words, its stock would need to increase in value by 1,100%. That works out to a compound annual growth rate (CAGR) of more than 62%.

To say the least, that's a heavy lift. Yet, it's not impossible. In fact, there are examples of companies meeting or exceeding that level of growth.

For example, over the last five years, Nvidia and Tesla have both recorded CAGRs exceeding 62%. Nvidia has an incredible CAGR of 93%, while Tesla's is 74% -- all of that growth coming in the years between 2019 and 2022.

And there are others that have come close. Eli Lilly's five-year CAGR stands at 52%; Broadcom's is 45%.

NVDA Chart

NVDA data by YCharts

In other words, a 63% CAGR is astonishingly high, but it's not unachievable.

That said, Palantir would need an amazing rally to have any chance of hitting a $1 trillion valuation by 2030 -- which I think is unlikely to happen.

Is Palantir a buy now?

Yet, perhaps the better question to ask is whether Palantir stock is a buy right now.

On that question, I'm far more bullish.

Palantir is a well-run company with an innovative product, riding the wave of enthusiasm over AI. Its revenue growth stands at 27%, while its customer count is growing even faster.

In short, the company remains a growth investor's dream come true. And therefore, I continue to believe it is a stock worth owning -- even if it's unlikely to hit a $1 trillion valuation by 2030.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Amazon: if you invested $1,000 when we doubled down in 2010, you’d have $21,006!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $42,905!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $388,128!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of October 7, 2024

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jake Lerch has positions in Alphabet, Amazon, Nvidia, and Tesla. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, Palantir Technologies, and Tesla. The Motley Fool recommends Broadcom and 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.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Bitcoin volatility drops to third-lowest level since 2012 amid rise in BTC treasury companiesBitcoin (BTC) trades above $108,000 on Tuesday following a steady decline in its volatility in the first half of the year, marking the third-lowest H1 volatility since 2012.
Author  FXStreet
Yesterday 02: 11
Bitcoin (BTC) trades above $108,000 on Tuesday following a steady decline in its volatility in the first half of the year, marking the third-lowest H1 volatility since 2012.
placeholder
AUD/NZD inches higher to near 1.0900 as RBNZ maintains Official Cash Rate at 3.25%AUD/NZD holds ground after the Reserve Bank of New Zealand (RBNZ) decided to stand pat on the policy rate after six consecutive cuts, trading around 1.0890 during the Asian hours on Wednesday.
Author  FXStreet
Yesterday 03: 03
AUD/NZD holds ground after the Reserve Bank of New Zealand (RBNZ) decided to stand pat on the policy rate after six consecutive cuts, trading around 1.0890 during the Asian hours on Wednesday.
placeholder
Ethereum Price Turns Positive — More Upside Likely if Momentum HoldsETH is now consolidating gains and might aim for a fresh move above $2,620.
Author  NewsBTC
Yesterday 03: 26
ETH is now consolidating gains and might aim for a fresh move above $2,620.
placeholder
Jeff Bezos sold nearly 3 million Amazon shares for $665.8 million in early JulyJeff Bezos has sold nearly three million shares of Amazon in the first two days of July, offloading a total of $665.8 million.
Author  Cryptopolitan
23 hours ago
Jeff Bezos has sold nearly three million shares of Amazon in the first two days of July, offloading a total of $665.8 million.
placeholder
Gold price slides further below $3,300, over one-week low amid a firmer USDGold price (XAU/USD) trades with a negative bias below the $3,300 mark during the Asian session on Wednesday and drops to a one-and-a-half-week low in the last week.
Author  FXStreet
22 hours ago
Gold price (XAU/USD) trades with a negative bias below the $3,300 mark during the Asian session on Wednesday and drops to a one-and-a-half-week low in the last week.
goTop
quote