After the Recent Stock Market Drama, Where Will Artificial Intelligence (AI) Leader Palantir Be in 5 Years?

Harsh Chauhan, The Motley Fool

Sun, Mar 30, 2025, 12:00 PM 6 min read

Palantir Technologies (NASDAQ: PLTR) started 2025 with a bang, jumping more than 60% in just over two months on the back of a solid quarterly report that was released at the beginning of February, but the stock has witnessed a remarkable pullback since hitting a 52-week high on Feb. 18.

Specifically, Palantir stock is down 22% from its 52-week high. The decline can be attributed to multiple factors such as the overall negativity in tech stocks from the uncertainty caused by tariffs and other policies that are expected to weigh on the U.S. economy.

And there has been a rise in the probability of a recession in the U.S. because of the potential direction that the economy is expected to take. All this explains why investors may have decided to book profits in Palantir stock, especially after the massive gains that it delivered in the past year. Again, its expensive valuation could be another reason behind its recent pullback.

However, savvy investors will do well to keep an eye on Palantir stock and consider buying it if it continues to take a beating on the market. That's because the company is sitting on a tremendous growth opportunity that could send its shares soaring over the next five years.

Palantir released its fourth-quarter 2024 results on Feb. 3. Annual revenue landed at $2.87 billion, up by 29% from the prior year. What's worth noting is that the company's revenue growth accelerated through the year. Its top line jumped by 36% in the final quarter of the year. Looking ahead, Palantir seems well placed to witness continued acceleration in growth since it is considered to be the leading provider of artificial intelligence (AI) software platforms.

Various third-party estimates have ranked it as the No. 1 vendor of AI software platforms. This puts the company in position to make the most of a market that's expected to generate $153 billion in revenue in 2028, with a compound annual growth rate of nearly 41%. At this pace, the AI software platforms market could exceed $300 billion in revenue by the end of the decade.

Palantir's revenue pipeline is now growing almost in line with the pace at which the AI software platforms market is forecast to grow. This is evident from the 40% year-over-year increase in its remaining deal value (RDV) in the previous quarter to $5.43 billion. That was nearly double its full-year revenue and higher than the top-line growth it reported for the full year.

The robust growth in this metric is great news for Palantir investors. That's because RDV refers to the total value of the company's contracts that are yet to be fulfilled. More importantly, there was a remarkable acceleration in RDV last quarter when compared to the 22% year-over-year increase in the third quarter of 2024.