Will Palantir Technologies Be a Trillion-Dollar Stock by 2030?

It’s hard to predict how much more Palantir’s growth will accelerate, but this growth story appears to be in its early stages.

To become a $1 trillion company, Palantir will need to grow about seven times from its current size. This can be achieved through revenue growth, valuation, or both.

First, let’s forecast what Palantir’s revenue might look like by 2030. Analysts estimate Palantir’s revenue will be $2.8 billion in 2024. I extrapolate that to five years with hypothetical growth rates of 20%, 30% and 40%. That would look like this:

Table by author.

Palantir’s stock needs to trade at fairly high valuations to reach a $1 trillion market cap on $7 billion to $15 billion in revenue. The stock’s price-to-sales (P/S) ratio would need to be between 67 and 143, depending on whether Palantir’s sales hit the high or low end of these forecasts.

I won’t tell you it’s impossible. Snowflake was one of the hottest stocks on Wall Street at the end of 2021 when the company’s P/E ratio peaked at 183. However, this happened during a stock market bubble. Snowflake is still nearly 60% below its previous peak and its price-to-earnings ratio has plunged 90%. Such extreme valuations rarely end well.

Today, Palantir trades at a P/E ratio of 58. This isn’t the Snowflake high of 2021, but it is what it is even higher as its peak during the same market bubble!

Technically, Palantir can defy the odds, but I’d say it’s doubtful the stock will reach a $1 trillion market cap by 2030. Palantir is a mighty impressive company, but the problem is that the stock is already on the rise in at least a few years’ worth of growth. The calculus could change dramatically if the stock plunges to a much lower valuation or Palantir grows significantly above the 40% rate I forecast.

But beyond that, Palantir stock is itself arguably a bubble that could ultimately disappoint investors who expect more big things from the stock. Given all of this, it’s highly unlikely that Palantir can reach a trillion-dollar valuation in just over five years. But the chances of it outperforming the overall market are still within reach and it’s still worth taking a closer look.

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Justin Pope has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia, Palantir Technologies, and Snowflake. The Motley Fool has a disclosure policy.

Will Palantir Technologies Be a Trillion-Dollar Stock by 2030? was originally published by The Motley Fool