Key Points

  • A $10,000 investment at Palantir's $10 opening trade in September 2020 would be worth about $132,000 today.

  • Shares have fallen roughly 37% from their 52-week high during the AI sell-off.

  • First-quarter revenue grew 85% year over year, the company's fastest rate ever.

  • 10 stocks we like better than Palantir Technologies ›

Palantir Technologies (NASDAQ: PLTR) went public on Sept. 30, 2020, through a direct listing -- no underwriters, no offering price, just an opening trade of $10 per share, well above the $7.25 reference price the New York Stock Exchange had set. A $10,000 investment at that first trade bought 1,000 shares.

Those shares are worth about $132,000 today, with the stock trading near $132 as of this writing. That's about 13 times the original stake in just under six years. And it counts the damage from the AI sell-off, which has knocked the stock down roughly 37% from its 52-week high of $207.52.

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At that high, the same stake was worth more than $207,000. Even after giving a chunk of that back, the return works out to a compound annual growth rate of about 56%. I can't think of many large companies that have come close over the same stretch.

So patience in Palantir has paid, and paid absurdly well. But what is the next stretch of patience being asked to pay for?

The business behind the return

A return like this doesn't come from sentiment alone. The data analytics and AI (artificial intelligence) software specialist has grown into a company generating $1.6 billion in quarterly revenue -- and it is still accelerating.

Palantir's first-quarter revenue rose 85% year over year to $1.63 billion, its fastest growth rate ever as a public company. U.S. revenue more than doubled, climbing 104% to $1.28 billion, with U.S. commercial revenue up 133%. And this hypergrowth is profitable hypergrowth. The company posted net income under generally accepted accounting principles (GAAP) of $871 million in the quarter, a 53% net margin, or $0.34 per share.

"Momentum surged as we grew 85% last quarter--our highest-ever year-over-year growth rate--by more than doubling our U.S. business," said CEO Alex Karp in the company's first-quarter earnings release.

Management also raised its full-year outlook. It now expects 2026 revenue of about $7.65 billion, or 71% growth, and it lifted its U.S. commercial revenue guidance to at least $3.2 billion, representing growth of at least 120%.

The company closed $2.41 billion of total contract value in Q1, up 61% year over year, and it ended the first quarter of 2026 with $8 billion in cash, cash equivalents, and short-term Treasuries. Management also said it continues to expect GAAP profitability in every quarter of the year.

In other words, the sell-off in the stock hasn't shown up anywhere in the business.

Today's price asks a lot

Here's the uncomfortable part for anyone hoping to repeat the ride. Even down 37%, Palantir commands a market capitalization of about $316 billion, and shares trade at roughly 148 times earnings. Take the stock's price as a multiple of the consensus analyst forecast for this year's earnings per share, and the multiple is still about 89. Even against next year's forecast, shares trade at about 63 times earnings.

For perspective, that's well over double the roughly 40 times earnings commanded by Apple.

Of course, Palantir is growing far faster than Apple, and growth this fast at this scale is arguably unprecedented for a software company. A stock can grow into a towering multiple if the business underneath it keeps compounding.

If revenue keeps compounding anywhere near 70% and margins hold, Palantir could shrink that multiple quickly. The bull case isn't crazy. It's just expensive.

And that's the part of the backtest worth dwelling on. The investor who turned $10,000 into $132,000 didn't just buy a great business. They bought it before it became a $316 billion company. The stock looked pricey at its debut, too, but the business then delivered one of the great growth runs in software history to justify it. And the price now assumes that run continues for years to come.

So, what has patience in Palantir actually paid? About 13 times your money in under six years, sell-off included. For shareholders sitting on anything close to that gain, I see little reason to abandon a business executing this well, though trimming a position that has grown oversized could make sense. But for new money, I'm staying on the sidelines.

Paying about 89 times this year's expected earnings, after the lesson of the last six years is already in every headline, is a very different bet than paying $10 at the direct listing. I'd revisit the stock if the price falls further, or if profits keep growing into the valuation faster than expected.

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Daniel Sparks and his clients have positions in Apple. The Motley Fool has positions in and recommends Apple and Palantir Technologies. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.