Can a $10,000 Investment in Palantir Make You a Millionaire in a Decade?

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11 hours ago

Key Points
Palantir is a key AI software provider for government and commercial clients.
Its growth has been accelerating.
The stock is one of the most expensive on the market.
10 stocks we like better than Palantir Technologies ›
Palantir Technologies (NASDAQ: PLTR) has been one of the most popular artificial intelligence (AI) stocks over the past few years for good reason: It has been on an absolute tear, rising over 140% in 2025 alone.
But after such a successful run, many investors might be wondering if it's too late to buy the stock now. There are even some hopes of turning $10,000 into $1 million, a feat that few companies have ever accomplished. But could Palantir be one of these chosen few?
Palantir likely can't provide 100x returns from today's prices
Palantir has been on an impressive run already. If you invested $10,000 into the stock at the start of the AI race (the beginning of 2023), you would already have nearly $285,000. So, if you're lucky (or smart enough) to have picked the stock, then you're well on your way to achieving this rare feat.
But what about if you're considering investing in Palantir now?
At its current $430 billion market cap, Palantir would need to become a $43 trillion company to achieve that feat. Considering that the world's largest company, Nvidia (NASDAQ: NVDA), only has a $4.4 trillion market cap right now, that projection is extremely far-fetched.
It's unlikely Palantir can turn $10,000 into $1 million now. But can it still be a successful market-crushing stock from today's levels?
Palantir delivered impressive growth in Q2
Palantir started as a government-focused company that helped turn data streams into AI-powered insights. This helped governments make smart decisions with the best possible information. Eventually, it expanded onto the commercial side and experienced success there, too.
In the second quarter, its commercial and government revenue saw impressive growth, with commercial sales rising 47% year over year to $451 million and government sales increasing 49% to $553 million. This strength allowed the company to deliver its first quarter with $1 billion in revenue, and there's more growth ahead.
However, the stock price already has a ton of growth baked into it, which could be a significant headwind.
Palantir's stock is far from cheap
No matter how you look at it, the stock is expensive.
At 281 times forward earnings and 134 times sales, it's likely the most expensive stock on the market. It also indicates it has years of growth baked into it.
To evaluate the stock, I'll use a five-year time frame and make these assumptions:
Revenue growth accelerates to 50% and maintains that pace over the next five years.
It achieves and sustains a 30% profit margin.
The effects of stock-based compensation are ignored (even though Palantir has a significant stock-based compensation expense).
If those three things occur, Palantir's revenue and profits will rise from $3.44 billion and $763 million, respectively, to $26.1 billion and $7.83 billion. That's monster growth, but what will its valuation look like?
A far more reasonable valuation for Palantir is around 50 times forward earnings, placing it at about the same price tag as Nvidia, another leading AI company. In five years, if it has a forward earnings valuation of 50 times and generates profits of $7.83 billion, it would have a market cap of $392 billion, which is less than today's levels.
This indicates that there's more than five years' worth of growth baked into the stock price, which is far too expensive a premium to pay. As a result, I think investors should avoid Palantir's stock, as there are far more promising options that don't have as much aggressive growth baked into the price already.
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Keithen Drury has positions in Nvidia. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
Can a $10,000 Investment in Palantir Make You a Millionaire in a Decade? was originally published by The Motley Fool