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The emergence of artificial intelligence (AI) last year surprised many market watchers, particularly the rapid shift in paradigms at some of the world’s most valuable companies. apple handed over the top position to microsoftcurrently rules the roost with a market capitalization of over $3 trillion. Nvidia Boosted by its gold-standard AI chips, the company quickly rose to the No. 3 spot behind Apple with a market capitalization of $2.3 trillion. alphabet, Amazonand meta platform — each with its own AI solutions — are also members of this prestigious fraternity.
and Palantir Technologies‘ (NYSE:PLTR) With a market capitalization of just $54 billion (as of this writing), it may seem far-fetched to suggest it’s vying for membership in the $1 trillion club. However, given the accelerating demand for AI and the company’s expertise in this area, the odds are likely in Palantir’s favor.
AI before it went “viral”
It wasn’t that long ago that Palantir was relatively unknown outside of government circles. Data mining and his AI experts worked closely with U.S. intelligence agencies to hunt down terrorists and stop attacks before they could occur. Palantir quickly expanded beyond its original mission, creating advanced, bespoke AI models for other government agencies and businesses, helping them uncover valuable insights hidden deep within their data.
Palantir took off when the generative AI market exploded early last year, leveraging decades of expertise to develop a widely applicable solution. The result of these efforts is the Artificial Intelligence Platform (AIP), a homegrown generative AI system that Palantir developed in a matter of months. But it’s the company’s go-to-market strategy that is driving the most demand.
To take advantage of this opportunity, Palantir is hosting a bootcamp. “These immersive, hands-on keyboard sessions allow new and existing customers to build live with Palantir engineers, all working toward a common goal of bringing AI to their operations. ,” management said in the company’s fourth quarter business update. Attendance at these sessions is extraordinary because companies have an opportunity to use generative AI solutions to improve productivity and solve their most pressing business problems.
In October, Palantir announced plans to hold 500 bootcamps over the next year. Since then, the company has “smashed that goal” and completed over 560 bootcamps for 465 organizations in just four months.
This strong and growing demand is driving strong financial results. His Palantir revenue for the fourth quarter was $608 million, up 20% year-over-year and 9% sequentially. The biggest contributor was U.S. commercial revenue, which jumped 70% due to AIP demand. Palantir achieved his fifth consecutive quarter of profitability; S&P500 Some market players believe that will happen this year.
What really caught our attention was management’s outlook. As expected by the company. at least The US commercial sector, including AIP, will grow 40% over the next year.
The road to $1 trillion
Palantir is in a unique position among AI providers. The company has a long history of his AI expertise and a strong track record of delivering government contracts. This gives Palantir an advantage in providing AI solutions to the US government and its allies, and many believe the quest for sovereign AI among nations has already begun. On top of that, enterprise business has great potential and the opportunity is clear, but it won’t happen overnight.
According to Wall Street, Palantir is expected to generate revenue of $2.71 billion in 2024 and $3.23 billion by 2025, representing a forward price-to-sales (P/S) ratio of approximately 16 times. . Assuming a constant P/S, Palantir would need to grow revenue to about $60 billion annually to support a $1 trillion market cap. In the most recent quarter, revenue increased 20% year-over-year. At this rate, it will take Palantir 16 years to reach the $1 trillion threshold.
But the company’s U.S. commercial business grew 70% in the fourth quarter leveraging generative AI, and management is aiming for future growth. at least The sector’s growth rate is 40%, so it could soon outstrip other sales. This estimate could be conservative, as Palantir tends to underpromise and overdeliver. If the company’s revenue increases by nearly 40%, it could be worth more than $1 trillion within 10 years.
Estimates for generative AI are growing exponentially, with the market size estimated at between $2.6 trillion and $4.4 trillion annually, according to global management consulting firm McKinsey & Company.
If Palantir seizes a small portion of that huge growth opportunity, it won’t be long before it gains membership in the $1 trillion club.
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John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of the Motley Fool’s board of directors. Randi Zuckerberg is a former Facebook head of market development and spokesperson, sister of Meta Platforms CEO Mark Zuckerberg, and a member of the Motley Fool’s board of directors. Alphabet executive Suzanne Frye is a member of The Motley Fool’s board of directors. Danny Vena has held positions at Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Meta Platforms, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: A long January 2026 $395 call on Microsoft and a short January 2026 $405 call on Microsoft. The Motley Fool has a disclosure policy.
The post 1 unstoppable stock that could join Microsoft, Apple, Nvidia, Alphabet, Amazon and Meta in the $1 trillion club was originally published by The Motley Fool.
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