Artificial intelligence (AI) has been one of the most significant technological advancements in recent years, with its practical applications broadening rapidly. A glance at the world's leading companies by market value reveals that nine out of the top ten are at the forefront of AI innovation, each competing for dominance in this space.
Nvidia recently gained worldwide attention by achieving a $4 trillion valuation, now standing at $4.1 trillion. Microsoft and Apple are not far behind, with valuations of $3.7 trillion and $3.5 trillion, respectively. Completing the top five are Alphabet and Amazon, valued at $2.7 trillion and $2.4 trillion, respectively.
Given its current market capitalization of just $372 billion, it might seem ambitious to propose that Palantir Technologies ( PLTR -2.04%) could rise by 169% to join the $1 trillion club. However, while many businesses are still trying to adapt to this technological revolution, Palantir is already enabling organizations to benefit from AI and delivering value to its investors.
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Years of AI specialization
Long before it became a publicly traded company, Palantir was developing advanced AI technologies for U.S. government defense and intelligence agencies. More recently, it has concentrated on creating enterprise software designed to optimize efficiency and cut costs for businesses.
It was the launch of Palantir's Artificial Intelligence Platform that propelled it to prominence in the AI sector, as this tool utilizes generative AI to provide tailored, real-time solutions for business challenges.
The biggest hurdles to adopting AI are often knowing where to start and ensuring a worthwhile return on investment (ROI). Palantir has overcome both obstacles with an effective approach.
Palantir hosts "boot camps"—hands-on workshops—where developers and business executives can experience AIP firsthand. In these sessions, participants collaborate directly with Palantir engineers to find solutions for their actual business issues.
This method has proven highly successful. In the second quarter, Palantir's revenue reached $1 billion, reflecting a 48% increase from a year earlier and a 14% rise from the previous quarter. The highlight was its U.S. commercial revenue, which soared 93% to $306 million—amounting to nearly 31% of total revenue—driven by consistent demand for AIP. Adjusted earnings per share (EPS) jumped 78% to $0.16.
The segment closed the quarter with contracts valued at $843 million, up 222% year over year. This contributed to Palantir’s remaining performance obligation (RPO)—sales contractually committed but not yet recognized as revenue—expanding by 77% to $2.4 billion.
Palantir raised its annual outlook as well, now projecting at least 85% growth in its U.S. commercial division (primarily AIP) for 2025, up from earlier guidance of 68%.
The journey toward a $1 trillion valuation
Palantir has rewarded its investors handsomely thanks to its decades of AI experience and innovative solutions, and there could be even greater gains ahead.
Wall Street analysts estimate Palantir’s 2025 sales will reach $4.1 billion, giving it a forward price-to-sales (P/S) ratio of roughly 89. To support a $1 trillion market value at this ratio, the company would need to generate over $11 billion in yearly revenue.
Analysts are forecasting an average annual revenue growth rate of 38.7% for Palantir over the next five years. If this pace continues, Palantir could reach a $1 trillion valuation by 2028—or even sooner if its growth accelerates.
I am not alone in this view. Wedbush analyst Dan Ives has also run projections indicating Palantir's market cap could reach $1 trillion as soon as 2027 or 2028. Ives contends that those who focus only on valuation have overlooked every major tech transformation in the last two decades, and he believes AI will be the primary engine of Palantir’s success.
The company’s ongoing growth in both its client base and its financial results provides further support for this outlook.
No investment is without risk
Despite Palantir’s strong prospects, there are still significant risks. AI progress could slow, economic conditions could deteriorate, or Palantir might not fully seize the AI opportunity—all of which could negatively impact the stock. Additionally, the company’s current valuation is exceptionally high.
Palantir trades at 66 times projected sales and 184 times estimated earnings for the coming year. Historically, high multiples like these have led to increased price swings, and Palantir is no exception. Investors should be ready for considerable volatility in its share price.
There is a wide range of forecasts for generative AI’s potential, but the software market alone is noteworthy. Cathie Wood, CEO and founder of Ark Investment Management, estimates that if software companies capture 10% of the value generated by their AI products, revenues could reach $14 trillion by 2030.
If Palantir maintains its momentum and continues to deliver positive ROI for businesses adopting AI—which I believe is possible—it could achieve a $1 trillion valuation sooner than many anticipate.
