Palantir Technologies (NASDAQ: PLTR) was one of the most popular artificial intelligence (AI) stocks in 2024. Its stock jumped 340% in 2024, meaning it more than quadrupled in value in just one year. That outperformance isn’t common, but with all the tailwinds in the AI space, some investors are wondering if Palantir’s stock price could double in value in 2025.
An examination of one Palantir-related metric directly addresses this level of performance, and shareholders should pay attention to it in deciding what to do with their holdings. Potential investors considering the stock may also be interested.
Palantir is an AI company that provides its clients with dedicated solutions. Originally, its target audience was state entities, but over time it expanded to include commercial users. The primary use of its software is to run large amounts of data through pre-built AI models and then present its findings to decision-makers. This gives these people the best possible information at that moment on which to make a decision.
One of the latest additions to Palantir’s product line is its Artificial Intelligence Platform (AIP). AIP is Palantir’s answer to the generative AI trend. AIP enables its users to integrate AI models into the company’s internal operations and automate many processes. It also includes a feature for AI agents to perform tasks once performed by humans, further cementing its use.
AIP has led to a huge increase in demand for Palantir’s software, particularly on the US commercial side of its business. In the third quarter, Palantir’s total revenue rose 30% to $726 million, while US commercial revenue jumped 54% higher to $179 million. Clearly, the US commercial business is not Palantir’s largest segment, but it is the company’s fastest growing segment.
Along with strong growth, Palantir is consistently profitable generating around a 20% profit margin.
While the profit margins of some other software companies can exceed 30%, 20% is still a significant number because it shows that management values profitability along with growth.
Those are some strong financial results, but do they add up to a company that can double its market capitalization in 2025?
It’s hard to argue that Palantir isn’t a fantastic company succeeding in the AI arms race. However, the market saw this success as outright dominance and drove the stock to unreasonable levels. Palantir’s revenue rose 30% year-over-year in the most recent quarter, but the stock is up 340% for the year. Something doesn’t add up here, and the disparity shows up in Palantir’s assessment.
