Palantir’s 3-Year Trajectory: Where Will This Controversial Stock Land?
Palantir's data-mining empire faces its ultimate test—three years that could make or break its Wall Street credibility.
The AI Gold Rush
Government contracts keep the lights on, but commercial AI adoption drives the real growth story. Every Fortune 500 company now wrestling with data chaos represents a potential nine-figure deal.
Wall Street's Love-Hate Relationship
Analysts can't decide whether Palantir's building the next Oracle or heading for a spectacular implosion. The stock swings like crypto on caffeine—traders love the volatility while long-term investors sweat through earnings calls.
The Three-Year Countdown
Either those massive platform investments pay off with enterprise-scale adoption, or the 'special project' mystique wears thin. Profitability can't rely forever on classified government work and boardroom PowerPoints.
Meanwhile, hedge fund managers will keep collecting fees regardless of whether Palantir becomes the next tech titan or just another overhyped data company—proving once again that in finance, the house always wins.
Image source: Getty Images.
The Palantir value proposition
First, even Palantir's detractors have to understand the popularity of Palantir's AIP. Thanks to this product, customers have reported eye-popping productivity gains.
One client has used AIP and Palantir's commercial analysis tool Foundry to manage tariff exposure, administrative workflows, and manufacturing lines. Another reduced the time it took to balance its production line from one day to one hour. Amid such successes, Palantir's accelerating growth should not come as a surprise.
The results are telling. In the first half of 2025, the company's $1.9 billion in revenue grew 44% compared to the same period one year ago. That was almost double the 24% yearly revenue growth in the first half of 2024.
With that improvement, profits also increased. In the first two quarters of 2025, the net income attributable to shareholders was $541 million, rising 125% from year-ago levels. Not surprisingly, the stock price increases accelerated, and Palantir is up 315% over the last year alone.
Growth limitations
Unfortunately for prospective shareholders in Palantir, those gains may mean that it has already realized the growth it should have experienced over the next three years.
This is not because of the low likelihood of another 30-fold gain. At a market cap of $425 billion, such an increase WOULD take the market cap to nearly $13 trillion, a value difficult to imagine in a market that has yet to achieve its first $5 trillion market cap.
Instead, the valuation metrics show how far removed Palantir has become from its fundamentals. The company's P/E ratio stands at around 590.
Still, Palantir has consistently earned a positive generally accepted accounting principles (GAAP) net income since the fourth quarter of 2022, nearly three years ago. Since theaverage P/E ratio is about 31, it is far ahead of its fundamentals.
Looking at Palantir's forward P/E ratio, that is almost 280. The market often considers growth stocks with forward multiples expensive when they are at one-fourth that level. That is arguably even more true of its price-to-sales (P/S) ratio of about 130, which is far above the S&P 500 average of 3.4.
Do any of these mean that Palantir stock is in a "bubble?" The answer is arguably yes, but that does not mean the bubble will burst any time soon. Palantir continues to grow rapidly, and it is possible investors will push the stock higher if it defies expectations.
However, beating estimates further at such elevated levels is a difficult task. So high are these valuation metrics that any disappointment could cause the stock price to tumble, even if it reports objectively solid results. Such conditions could make Palantir too dangerous to touch in the short term and possibly anytime over the next three years.
Palantir in three years
Although anything can happen with Palantir stock over the next three years, its prospects for beating the market during that time frame are doubtful.
As previously mentioned, the stock has risen 30-fold from its 2022 low. Palantir likely won't need to repeat that feat to beat the market, but it will probably have to keep increasing in price. Unfortunately for the company, the valuation metrics indicate that the stock has already realized those gains.
Even if profits doubled in the next three years and the stock price stayed the same, its P/E ratio would be approximately 75, creating a tremendous headwind for Palantir stock.
As a company, Palantir is likely to continue prospering long-term. Nonetheless, with the valuation arguably in "bubble" territory, other stocks offer a more likely path to market-beating gains over the next three years.
