Where will Palantir Technologies be in a year?

Palantir Technologies (PLTR +1.00%) The stock has delivered huge returns to investors over the past year, but the artificial intelligence (AI) software company seems to have been in a slump recently after reporting its latest quarterly results.

It’s been a little over a week since Palantir reported its third quarter earnings on November 3rd. Since then (as of this writing) the stock has lost 6% in value. One surprising thing to note is that Palantir stock price fell despite delivering a bullish report. The company’s growth continues to get better every quarter due to the growing demand for AI software solutions.

But concerns about Palantir’s valuation and economic conditions have investors hitting the panic button. Does this mean Palantir stock will perform poorly next year? Let’s find out.

Image source: Getty Images.

Analysts expect double-digit profits from Palantir next year.

Palantir stock has more than tripled over the past year, gaining a whopping 231% in value. The stock’s 12-month average price target of $200 suggests it could rise just 3% over the next year. It’s worth noting that Palantir was trading above the median price target before the earnings report came out.

today’s change

(1.00%)$1.73

current price

$173.87

Key data points

market capitalization

$410 billion

work range

$164.50 -$177.26

52 week range

$58.85 -$207.52

volume

2.2 million

average volume

63M

gross profit

80.81%

dividend yield

Not applicable

So it seems like analysts aren’t very optimistic about this AI stock’s prospects in the coming year. Moreover, only a quarter of the 29 analysts covering the stock suggest buying the stock right now. The majority (62%) rate Palantir a Hold (as of this writing).

It’s easy to see why Palantir isn’t expected to maintain its hot rally next year. The stock is trading at 127 times sales, 450 times trailing earnings, and 206 times forward earnings. So investors who want to buy this stock right now will have to pay a huge premium. This may not seem like a wise move, as there are companies with impressive growth rates at cheaper valuations.

But what if you’re a current Palantir shareholder? You might want to consider selling shares and booking a profit, especially considering the market was unimpressed by the company’s better-than-expected financials and improved guidance, which should have ideally been the catalyst. But selling Palantir may not be a wise move.

The stock price is likely to bounce back next year. Let’s take a look at why this is likely.

The market appears to be underestimating Palantir’s potential.

There’s no denying that Palantir is extremely expensive right now. However, the company’s valuation doesn’t fully capture its incredible growth potential.

Palantir reported third-quarter revenue of $1.18 billion, up 63% year-over-year. This is a significant improvement over the 39% and 48% jumps the company reported in the first two quarters of the year. The company’s guidance for $1.33 billion in revenue for the quarter points to a potential increase of 61% year-over-year.

But Palantir has a backlog large enough to easily record much faster growth. Last quarter ended with $8.6 billion in remaining transaction value (RDV), a 91% increase over the previous year. This metric represents the total value of Palantir’s unfulfilled contracts at the end of a period and provides insight into the company’s ability to generate future revenue.

The good thing is that Palantir’s RDV growth has been picking up significantly in recent quarters, which is also having a positive impact on the company’s top line. This can be seen in the table below.

Moreover, Palantir’s revenue growth has been significantly accelerated by the large contracts the company is currently signing with its customers. Non-GAAP (generally accepted accounting principles) earnings came in at $0.21 per share last quarter, up 110% year-over-year. This is a significant improvement compared to the 43% growth recorded in the same period last year.

So it’s no surprise that Palantir delivers a much larger revenue jump in 2026, compared to the 36% jump analysts estimate. Palantir is expected to end 2025 with earnings of $0.72 per share, up 76% from last year. Of course, there’s a good chance it can do better than that, thanks to its fast-growing contract backlog that’s driving top and bottom line growth.

Moreover, Palantir can replicate its growth trajectory in 2026. I wouldn’t be surprised if net profits doubled next year. This presents a great opportunity for the stock and could help deliver much larger gains than Wall Street’s median 12-month price target. It’s likely that Palantir will reach the Street’s top price target of $255 next year. This targets a gain of 32% from current levels.

Therefore, Palantir investors would do well to not panic and continue to hold this AI stock in their portfolios. That’s because a significant acceleration in revenue growth will likely translate into more upside next year.