Will Palantir Be a $1 Trillion Company by 2035?
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Palantir nologies (PLTR 1. 62%) has been one of the top-performing stocks since the start of 2024, rising nearly 700%. It has also been a top performer in 2025, rising...
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July 6, 2025
05:30 AM
The Motley Fool
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Palantir nologies (PLTR 1. 62%) has been one of the top-performing stocks since the start of 2024, rising nearly 700%
It has also been a top performer in 2025, rising 80% so far
Palantir's has been booming alongside the artificial intelligence (AI) arms race
With no signs of AI spending slowing down, investors are speculating that Palantir's stock could eventually reach a $1 trillion market capitalization
Palantir's current valuation hovers around $320 billion, so the stock would need to more than triple to cross that threshold
But can that happen over the next decade
Image source: Getty Images
Palantir is seeing phenomenal growth in multiple sectors Palantir offers AI-powered data analytics solutions that help decision makers make the best choice possible
Originally, Palantir began with government clients, but it has also expanded into the commercial sector over the past few years
Although commercial revenue has grown significantly, government revenue still makes up the majority of Palantir's total revenue
In Q1, government revenue was $487 million, and on the commercial side, it was $397 million
Government revenue is also rapidly increasing, rising 45% year over year
Government increased at the same rate as international, indicating widespread adoption of Palantir's ducts worldwide
However, that story is completely different on the commercial side
Commercial revenue rose 71% year over year in Q1, while overall commercial revenue rose 33%
This indicates global AI adoption (specifically in Europe) lags the U. , but that story could change over the next few years
That could rapidly accelerate and cause Palantir's impressive 39% growth rate to rise even further
Palantir bulls point to this as a reason why the stock could reach a $1 trillion valuation by 2035
However, the bears have another key point to consider, and it could derail the entire investment thesis
Palantir's stock is overvalued One thing that should raise a red flag for investors with Palantir's stock is its 700% rise alongside its 39% growth rate
Those two figures are completely mismatched, indicating that Palantir's stock might be overvalued
After evaluating Palantir's price-to-sales valuation, this fact is confirmed
PLTR PS Ratio data by YCharts Most software companies trade at a multiple of 10 to 20 times sales
The best companies with rapid growth rates can trade upwards of 30 times sales
However, Palantir's stock is more than three times that level
Achieving nearly 110 times sales is practically unheard of in the stock market, and if a stock ever reaches that valuation, it usually only does so when it's doubling or tripling its revenue year over year
Even then, some of those companies crash from a high valuation
Even if Palantir gets a boost from rising European revenue, I don't think it's going to be enough to pel its stock to a reasonable level
Multiple years of revenue growth are already baked into the stock price
For Palantir to achieve a still very expensive but far more reasonable price tag of 30 times sales, it would require 363% revenue growth from today's levels
As a result, I don't think Palantir can triple its stock price over the next decade because it's going to spend the first part of it growing into the extremely high valuation it has now
Investors need to be cautious because high expectations are already baked into the stock price; any misstep could cause the stock to tumble back to reality
Keithen Drury has no position in any of the stocks mentioned
The Motley Fool has positions in and recommends Palantir nologies
The Motley Fool has a disclosure policy.
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