Could Palantir Stock Make You a Millionaire?

When it comes to growth potential, Palantir (PLTR 4.67%) has attracted increased attention in recent months. The generative AI capabilities of its AI platform, better known as AIP, have delivered massive productivity gains to customers.

Indeed, some of these benefits should accrue to shareholders. The question is whether that gain is enough to provide a 100x gain that could help smaller investors, an amount that could turn a $10,000 investment into $1 million or more.

Palantir’s Growth Potential

Palantir has done a smart thing by marketing AIP through its so-called “boot camps”. These forums allow potential customers to use the platform to resolve issues, and given the productivity gains, some customers will see massive returns.

One customer claimed to be 10x more efficient using the AIP platform while using a third of the resources. Palantir also says it has closed a seven-figure deal with an unnamed wholesale insurance brokerage just days after demonstrating an automated use case for policy review.

Such effects inspire other potential customers to attend bootcamps and perhaps sign up as customers if they can use the platform to achieve said productivity gains themselves.

Financial challenges

However, investors are seeing triple-digit revenue growth Nvidia and hoping that Palantir will grow as quickly as possible should temper expectations. For the first six months of 2024, revenue of $1.3 billion was up 24% from the first two quarters of 2023. While that’s solid growth for Palantir, it might not be enough for some growth investors .

The profit picture looks better, as Palantir earned $240 million in net income in the first half of 2024, up from $45 million in the same period a year ago. However, Palantir has only been profitable since Q4 2022, so the growth rate is likely a virtue of early profitability as much as it is a product of its growth.

Palantir’s share price growth has also taken its toll redirect P/E ratio at 103 and price-to-sales (P/S) ratio at 35. That’s expensive by any measure and likely means the stock has already achieved some of the growth needed to make millionaires.

Moreover, according to consensus estimates, analysts forecast revenue growth of 24% in 2024 and 21% the following year. While such growth is bullish for Palantir, it may not be enough to support the current valuation.

Additionally, Palantir’s market capitalization has grown to $82 billion. A 100x gain in the stock would take the market capitalization to $8.2 trillion. That’s about 2.3 times its market cap of $3.4 trillion Applethe current market capitalization leader. That shows how much Palantir will have to grow to make millionaires out of small investors.

Palantir will beat millionaires?

Palantir can certainly help small investors become millionaires, but the SaaS stock isn’t likely to get them to that point on its own.

Indeed, productivity gains hold the potential to take Palantir stock much higher over time. So even if the new buyers don’t become millionaires, they will likely become significantly richer by owning this stock.

However, the revenue growth may not yet reflect the growth potential that AIP has now provided to its users. This could turn the short- and medium-term outlook for Palantir negative for a while.

Also, even if time proves analysts wrong and revenue growth accelerates, Palantir’s $82 billion size will mean its market cap will need to more than double its current record market cap to offer a 100x gain from current levels. Furthermore, investors may question the P/S ratio of 35 if this faster revenue growth does not materialize.

Palantir may still emerge as a long-term winner despite these concerns, but at current levels, small investors should temper any “million dollar” expectations.