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Palantir Applied sciences (NASDAQ:PLTR) has became an absolute monster synthetic intelligence (AI) inventory. In simply two years, it has skyrocketed by simply over 1,000%, turning each £20k invested into greater than £200k.
The share value chart is the stuff of goals for many buyers.
Spectacular progress
Frustratingly, I checked out Palantir inventory in 2023 when it was buying and selling for lower than $10 (it’s now at $160). However I didn’t make investments.
Trying again by means of my notes from the time, I see I had a few considerations that now appear trivial with the advantage of hindsight. For instance, I anxious {that a} slowdown in authorities contract wins might harm income progress.
Nonetheless, Palantir had simply launched its Synthetic Intelligence Platform (AIP), a type of safe AI working system for an organisation’s knowledge. AIP was about to place rocket boosters underneath its business enterprise.
In Q2 2025, US business income surged by a staggering 93% yr on yr — and 20% quarter on quarter — to $306m. Buyer rely grew 43% to 849, whereas Palantir booked its first $1bn quarter sooner than Wall Road anticipated.
One other concern I had was valuation. The worth-to-sales (P/S) ratio on the time was about 15, which I believed seemed a bit excessive. Once more although, I completely underestimated the corporate’s capacity to speed up income progress.
Unapologetically pro-American
Lastly, I famous to myself that Palantir will be considerably controversial. It’s unapologetically pro-American/Western, and administration has frequently spoken out towards ‘woke’ tradition.
My concern was that some corporations, liberal governments, and buyers wouldn’t wish to be related to this, in the end limiting its market alternative. However I used to be spectacularly fallacious about that (prospects are prioritising AI-driven effectivity and product high quality above all else).
We nonetheless imagine America is the chief of the free world, that the West is superior, that we now have to struggle for these values, that we must always give American companies and, most significantly, our authorities an unfair benefit.
CEO Alex Karp
The 12-month goal
Palantir helps lots of of corporations develop into radically extra environment friendly. For instance, Citibank has reduce onboarding from 9 days to seconds utilizing Palantir, whereas Fannie Mae can now spot mortgage fraud nearly immediately.
Main by instance, Karp is aiming to develop Palantir’s income by 10 occasions over the following few years whereas lowering the workforce. If this occurred over 10 years, income would find yourself at roughly $41bn, equal to a compound annual progress price of about 26%.
This yr, the highest line is anticipated to extend 45%, then one other 35% in 2026 and 2027. So this goal doesn’t appear far-fetched to me.
My downside right here is how a lot I must pay now for this potential future progress. The P/S a number of is 118, whereas the ahead price-to-earnings ratio is 256. I usually don’t thoughts paying up for excessive high quality, however this simply appears like an excessive a number of.
At this sky-high valuation, even a small progress wobble might set off a big share value pullback.
In the meantime, the 12-month value goal is $155. Primarily based on this, a £20,000 funding would make a unfavorable return, although loads of forecasts have been rubbished by Palantir’s efficiency since 2023.
Weighing issues up, I believe I’ve missed the boat by a mile. I’ll anticipate any huge inventory dip earlier than deciding whether or not to pounce.
