Palantir Stock in 5 Years — Do the Fundamentals Justify Its Current Price Tag?

• Palantis has been one of the best-performing U.S. stocks in 2024.
• Its managers have become notably richer thanks to the rise in shares.
• According to analysts, PLTR stock has still room to grow.

Palantir Technologies has been on a tear in 2024, fueled by strong earnings, a recent shift to the Nasdaq-100, and its bet on artificial intelligence. Its stock surge has made Palantir’s cofounders new billionaires.

While the stock keeps growing, and there’s been just a little pullback, investors wonder what’s ahead for the software company specializing in big data analytics.

What’s Driving Palantir Stock?

Palantir Technologies (PLTR) has stood out in the 2024 AI-driven market surge, with its shares soaring 361% year-to-date. Unlike many speculative AI plays, Palantir’s rise is firmly grounded in substantial operational success and real-world applications.

In its Q3 2024 earnings report , Palantir exceeded expectations by reporting $725.5 million in revenue—a 30% year-over-year increase and about $22 million above estimates. The company’s free cash flow margin experienced a significant jump, climbing to 60% from 25% in the same quarter last year.

Strong performances across critical segments drive this growth: U.S. commercial revenue rose 54% year-over-year, while government revenue grew by 40%. These achievements have further cemented confidence in Palantir’s long-term potential.

The company’s success has also elevated its co-founders, Joe Lonsdale and Stephen Cohen, both 42, to billionaire status.

According to Forbes , Cohen’s net worth now stands at $2.3 billion, while Lonsdale, holding a 1% stake in Palantir valued at roughly $1 billion, is estimated to be worth $1.6 billion.

Lonsdale has also invested heavily in software and defense companies through his venture firm, 8VC, capitalizing on gains from various portfolio companies, including OpenGov.

However, the richest among Palantir’s co-founders is Peter Thiel , whose net worth is $15.3 billion.

For another co-founder, Alex Karp, as of December 2024, Forbes estimates a net worth  of approximately $7.5 billion.

Karp’s wealth is largely tied to his holdings in Palantir. Despite selling shares valued at hundreds of millions of dollars over the year, the CEO still holds a 3.3% stake in the company, worth roughly $5.3 billion.

Moving to the Nasdaq-100

Palantir shifted its listing from the New York Stock Exchange (NYSE) to the Nasdaq exchange. The company stated that this move aligns with its expectations of meeting the eligibility requirements for inclusion in the Nasdaq-100 index upon completion of the transition.

While changing exchanges is unlikely to impact Palantir’s core business operations directly, the move could enhance the stock’s liquidity and visibility. Following the announcement, Palantir shares  surged over 11%, reflecting investor optimism about the potential benefits of joining the prestigious Nasdaq-100.

Historically , companies added to the Nasdaq-100 have experienced stock price increases, with gains between 11% and 17% over the following year.

Palantir‘s market capitalization is rapidly approaching $150 billion, with its price-to-sales ratio now climbing to 52.8. By traditional valuation metrics, this suggests that the stock may be overpriced.

This doesn’t imply that Palantir lacks potential, but it will likely take some time for the company to grow into its current valuation. Investors should temper expectations and not anticipate the recent rapid gains to persist. A prolonged pullback  in the stock’s price wouldn’t be a surprise.

Five-Year Outlook

For Palantir, analysts project  solid growth for the coming years, with a forecasted revenue increase of just over 20% and earnings per share (EPS) of 47 cents for 2025. While this would place the stock price at around $58, down by 12% from its current level, they also anticipate the company surpassing $1 billion in free cash flow, hitting $1.052 billion.

By 2026, revenue growth may remain strong, and net income should increase by nearly 24%, with price target average rising to $81, representing a 23% upside.

Looking further ahead, 2027 could see a significant jump in both revenue and net income, with an estimated EPS of $0.71. Palantir’s free cash flow may exceed $2 billion by now, reaching $2.38 billion. This would support a price target of $92, reflecting a 40% upside from current levels.

In 2028, analysts expect Palantir’s revenue to hit $6.104 billion, with net income reaching $1.432 billion and EPS climbing to $0.79. Free cash flow could surpass $3 billion, and our forecasted stock price for this year is $102, reflecting a potential 55.09% increase.

For 2029, we expect revenue to grow to $7.208 billion, with net income increasing by 22%. Free cash flow should also exceed $4 billion, at $4.566 billion, and although growth may slow slightly, the stock price could rise to $114, reflecting a 73.33% upside.

By 2030, Palantir’s revenue should exceed $8 billion, and net income may surpass $2 billion, with an EPS of $1.27. Free cash flow could approach $6 billion, supporting a stock price of $125, representing a 90.06% upside from the current price.