If you bought $10,000 of Palantir (PLTR -2.14%) stock in 2020 when shares first hit the public market, you’d have close to $187,000 as of this writing. That kind of money can create a solid foundation toward building a $1 million portfolio. Even if Palantir stock merely meets the average return of the S&P 500, keeping those shares for another 15 to 20 years could result in a shareholder reaching millionaire status.

But a lot of people missed the boat on Palantir. The company’s stock has zoomed higher since late 2022, as generative artificial intelligence (AI) has helped expand its capabilities and support profitable revenue growth. And if you’re just looking to invest in Palantir shares today, you may be wondering if you missed the chance to become a millionaire on the back of a relatively small $10,000 investment in one of the hottest tech companies in the world.

Looking into Palantir

Palantir’s software collects disparate data sets from an organization and external sources, cleans them, identifies connections, and provides valuable insights that aid decision-makers in their role. While cloud computing providers might offer their own analytics tools, Palantir’s machine learning algorithms have proven extremely valuable, especially for customers with data spread across various sources.

In 2023, Palantir launched its Artificial Intelligence Platform (AIP), which allows an organization to use a large language model to interact with its software using natural language. That has significantly lowered the technical expertise required to get the most out of Palantir while expanding its use cases.

The financial results since that launch have been spectacular. Palantir just reported its eighth straight quarter of accelerating revenue growth, and management’s outlook for the third quarter suggests a ninth is in the making. In that time, Palantir has become profitable, enjoying very strong operating leverage. Its adjusted operating margin climbed to 46% last quarter, up from 37% last year and 25% two years ago.

CEO Alex Karp boasts that this kind of growth is unprecedented for a company with the scale of Palantir. The company surpassed $1 billion in revenue last quarter, and its so-called Rule of 40 score (revenue growth plus operating margin) came in at 94, blowing away the gold standard for investing in software companies.

While the profitable revenue growth is extremely impressive, there’s reason to doubt that Palantir’s stock can continue to produce the same level of returns as it has over the last three years. It’ll be hard for it to even come close.

Can $10,000 invested today turn into $1 million?

Turning $10,000 into $1 million requires an investment to increase 100-fold. To put that in perspective, Palantir currently has a market cap of $445 billion as of this writing. To increase 100-fold would put its market cap at $44.5 trillion. The largest company in the world right now has a market cap one-tenth that size. So, that’s a big hurdle in and of itself.

The more pressing issue, however, is the current valuation investors put on Palantir’s stock. Shares currently trade for more than 100 times revenue expectations over the next 12 months. That’s not just a high multiple, it’s stratospheric. Other AI stocks can be had for multiples below 20-times sales. That said, few are growing like Palantir with its profitability and at its scale. Still, such a premium price is hard to justify.

Even if Palantir grows revenue at an average rate of 50% through the end of 2030, its current price would still be about 14 times sales (five and a half years down the line). Only a handful of AI software stocks command a multiple like that for their 2026 revenue expectations.

Palantir should see its price-to-sales multiple shrink over the next five years. Revenue won’t accelerate forever, but many investors are acting like it should. Wall Street is decidedly bearish on the stock, but retail ownership (above 40%) continues to support the rising stock price. That makes Palantir extremely susceptible to an earnings miss or a shift in investor sentiment.

Investors looking at the stock today may want to wait for a significant pullback in price before adding shares to their portfolio. It’s unlikely that a $10,000 investment in Palantir today will make you a millionaire.

Adam Levy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.

Want to make boatloads of money? Bet on the right stock at the right time. Palantir Technologies (PLTR 4.38%) is an excellent example of how this can work. A $10,000 investment made when the company went public in late 2020 would be worth $146,000 today — a return of 1,270% compared to the S&P 500‘s return of 84% over the same time frame.

That said, past performance is no guarantee of future performance. And Palantir’s rocket ship rally made its shares uncomfortably expensive compared to market averages. Let’s dig deeper to see if the data analytics and artificial intelligence (AI) leader is still capable of multibagger long-term returns.

A unique take on data analytics and AI

Since its founding in 2003, Palantir focused on providing software to help public- and private-sector clients identify trends, detect fraud, and optimize their operations through big data analytics. Investors became particularly excited about the stock after it began incorporating generative AI-related functionality into its offerings, allowing it to deliver real-time insights in situations like battlefields or law enforcement.

More importantly, AI-related demand seems to be having a significant impact on the company’s operations. First-quarter earnings were excellent, with revenue jumping 39% year over year to $883.9 million, while profits more than doubled to $217.7 million.

However, investors should note that much of this growth came from Palantir’s commercial segment, where it sells software to private enterprises instead of the government. While this likely represents a larger market opportunity, its economic moat against rivals is shallower.

In the private sector, Palantir is less able to leverage its trust, political connections, and security clearances to compete. And it will face stiff competition from rivals like Microsoft and Amazon, which offer similar data analytics software and services. These companies are also much more vertically integrated than Palantir because they also operate robust in-house cloud computing services, while Palantir is more reliant on third-party infrastructure.

Is Palantir a millionaire-maker stock?

In order to turn a $10,000 initial investment into $1 million, Palantir will have to grow by a further 585% from its current price. On the surface, seems looks easy for a stock that has enjoyed a compound annual growth rate (CAGR) of almost 74% since hitting the market less than five years ago. However, things are very different now. The larger a company becomes, the harder it becomes to grow. Customers become harder to find, and bigger contracts are needed to move the needle.

A 585% increase in Palantir’s stock price would give the company a market cap of $2.33 trillion, making it the fifth-largest company in the U.S. behind Amazon. While this is technically possible over the long term, it is unclear if Palantir’s addressable market can support this much expansion. Other tech giants like Amazon, Nvidia, and Microsoft serve much larger opportunities and often boast higher levels of diversification.

For example, while Palantir has a niche focus on data analytics, Microsoft’s competing platform, Fabric, likely only represents a small part of its $245.1 billion software empire.

Palantir’s earnings and revenue also haven’t kept up with its stock price growth, leading to an incredibly high price-to-earnings (P/E) ratio of 627 compared to the S&P 500 average of 29. This inflated valuation suggests there isn’t much room for fundamentals-led growth. Palantir investors should consider taking profits before there is a correction in the stock.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Amazon, Microsoft, Nvidia, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.