Is Palantir a Trillion Dollar Company?
Before you laugh, hear me out. Palantir (NYSE: PLTR) isn’t just a meme stock anymore, I think we can agree on that. The company has proven itself to finally be profitable after years of bleeding money. Palantir has never seen the rapid growth that other software stocks have seen. For one, its revenue has not provided investors with the type of exponential year-over-year growth that the market is looking for. Even though it is often seen as a competitor to the likes of Snowflake (NYSE: SNOW), Palantir pales in comparison when it comes to growth.
So why would I even ask if it is a trillion-dollar company? It seems like every week Palantir is signing a new contract with a company or government agency. Its Foundry platform is rapidly being adopted as one of the leading data analytics systems in the world. The US Army believes so, the UK’s NHS believes so, and hundreds of corporations do too. Palantir is currently at the stage where it is building out its network and establishing itself as the go-to resource for data analytics. With more contracts comes more annual recurring revenue. The stickier the platform, the more likely customers will remain with Palantir due to high switching costs.
But a trillion-dollar company? A lot of people think the stock is overvalued as it is. Why do I think it can continue to grow into one of the largest companies in the world? It is all about capturing the market of what should be one of the leading industries in the future. Just as Tesla (NASDAQ: TSLA) is doing with electric vehicles and NVIDIA (NASDAQ: NVDA) is doing with GPUs, Palantir is doing with data.
Palantir Stock Outlook
Palantir’s stock has been disappointing, no doubt. After hitting a pandemic high of about $45.00 per share, Palantir’s stock has been slowly building support through the teens. The stock has been a strong performer this year and has already gained over 170% and nearly 100% over the past six months. But shareholders know that it has been steadily building its base and not making massive jumps. This is the sign of a healthy stock that is slowly making higher highs.
Then there is the elephant in the room. The world is in turmoil right now with geopolitical tensions at a near-term high. The war in Ukraine and the conflict in Israel are reminders that there is always the threat of war on the horizon. Palantir is a company that global militaries turn to to analyze data. Like it or not, Palantir and its stock benefit when there are military conflicts.
Do I think this growth will come soon? No, of course not. I don’t expect this for another ten or even twenty years from Palantir. But do I see this in the range of possibilities for this company? Absolutely. While the stock is trading at a high multiple right now, zoom out and look ahead ten or twenty years. Do you really think Palantir will still be just a $37 billion dollar company? I don’t.