Palantir Stock in 5 Years: Fundamentals May Not Protect From Stock Plummet

• Palantir was one of the best-performing U.S. stocks in 2024 and early 2025.
• Its managers have become notably richer thanks to the stock rise but can now sell millions of 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.

PLTS stock dropped by two digits in a single trading session in mid-February, but analysts are confident about a possible return to growth.

PLTR Worst Drop In a Single Day

Palantir (PLTR), which relies heavily on government contracts, saw its stock drop 10% Wednesday and another 5% in early Thursday pre-market trading.

The AI-driven intelligence company could face major risks as defense cuts take effect. Despite this, Palantir remains the second-best performing stock in the S&P 500 in 2025, up over 48% year to date and 350% in the past year.

The Trump administration has ordered the Pentagon to cut its budget by 8% annually over the next five years, with exemptions for areas like border security and missile defense.

Defense Secretary Pete Hegseth has given senior leaders until Feb. 24 to draft a plan. The move follows Trump’s announcement of planned talks with China and Russia to halve defense spending.

The Financial Times previously reported that Palantir was in talks with competitors, including Anduril, to form a consortium that will bid for U.S. government contracts.

CEO Plans Shares Sale

In a regulatory filing , Palantir revealed that CEO Alex Karp has put in place a new plan allowing him to sell up to 10 million shares over the next six months.

According to the filing, Karp adopted a Rule 10b5-1 trading plan on Dec. 11, 2024, enabling stock sales under specific price and market conditions.

The plan covers a maximum of 9,975,000 Class A shares, accounting for potential tax withholdings, and will remain in effect until Sept. 12, 2025, unless completed or expired earlier.

Palantir President and Board member Stephen Cohen established a similar trading plan on the same day, allowing for the potential sale of up to 4,060,000 Class A shares. The plan follows the same conditions and timeframe as Karp’s.

Palantir Top Stock in S&P 500

Palantir Technologies has been a top performer on Wall Street, up nearly 55% this year . The company’s strong earnings and the potential for AI-driven growth have fueled its rise.

CEO Alex Karp’s bullish outlook has attracted a loyal following, with some comparing him to Nvidia’s Jensen Huang.

Is PLTR Overvalued?

Despite this, the stock trades at over 200 times its earnings, and many analysts remain skeptical. Only 6 of 24 analysts rate it a Buy, with a consensus price target 20% below its current price.

He continued, “They’ve got, I think, really strong and innovative management, and we’re in the early days. This is, I think, a long-term winner, but the market needs to digest what’s happened with the stock.”

Kern added, “We’ve got a nice growth rate, but the stock’s up more than 300% over the past 52 weeks. The growth rate doesn’t justify the level of the stock price, but I think, long term, Palantir’s stock is very much worth watching.”

What’s Driving Palantir Stock?

Palantir Technologies (PLTR) has stood out in the 2024 AI-driven market surge, with shares soaring 340% in the year. Unlike many speculative AI plays, Palantir’s rise is firmly grounded in substantial operational success and real-world applications.

The company reported fourth-quarter earnings and revenue that exceeded Wall Street estimates . The company posted adjusted earnings of 14 cents per share, beating expectations of 11 cents and revenue of $828 million, surpassing the $776 million forecast.

Palantir also provided strong guidance , with projected first-quarter revenue between $858 million and $862 million and full-year sales of $3.74 billion to $3.76 billion, above the $3.52 billion average estimate.

CEO Alex Karp credited much of the growth to the company’s AI efforts, noting its expanding role in the AI revolution.

Revenue rose 36% from a year earlier, with U.S. commercial revenue increasing 64% to $214 million and government revenue growing 45% to $343 million.

Palantir expects U.S. commercial sales to grow at least 54% in 2025.

Managers Benefitting From Company Success

The company’s success has also elevated its co-founders, Joe Lonsdale and Stephen Cohen, both 43, 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 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.

Co-founder Alex Karp has an estimated net worth of approximately $7.86 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.

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 the average target price 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.