Palantir Stock: A $50,000 Investment's Potential to Create Millionaires

Could Investing $50,000 in Palantir Stock Make You a Millionaire?

Finding the next stock that could make you a millionaire is obviously a draw for many people. However, it's rare to find a company that actually has the potential to grow as large as it needs to become to allow you to become a millionaire from one investment. To turn $50,000 into $1 million, the stock would need to rise by 20 times. That's a tall order, a feat that few companies ever accomplish. One stock that some have pointed out with this potential is Palantir (NYSE: PLTR), as its artificial intelligence (AI) software could become widespread. So, could a $50,000 investment in Palantir make you a millionaire? Palantir's AI platform is gaining popularity Part of Palantir's draw is its dual customer structure. Originally, Palantir only created software for government use. This lucrative market for Palantir still makes up over half of its revenue. However, Palantir recognized the use case for its AI software outside of pure government use and expanded onto the commercial side, which has seen phenomenal growth. Palantir's software can be deployed in practically any industry, as the simple concept of data in, insights out is how Palantir works. So whether an intelligence agency is using it to locate a terrorist (which Palantir reportedly helped do with Osama bin Laden), efficiently scheduling hospital staff, or optimizing a supply chain, Palantir has customers covered. Its latest product, Artificial Intelligence Platform (AIP), has been a huge success, as it allows customers to build AI solutions into every facet of a business. According to management, the demand for AIP has been "unprecedented" and is a huge reason why its U.S. commercial customer revenue rose 40% year over year in the first quarter. But does all of this add up to a stock that can increase by 20 times? Palantir's growth would need to be incredible to achieve this feat Despite Palantir generating $634 million in revenue in Q1, its customer base is relatively small. In the U.S., Palantir only had 262 customers. There are far more companies in the U.S. than that, so Palantir's growth runway is quite large. However, one drawback to Palantir's software is its cost. By dividing U.S. commercial revenue by U.S. commercial customer count, you'd get the average price spent per customer. That figure is $573,000. Remember, that's only quarterly revenue, so the annual cost would be north of $2 million. Not every company can afford that, so its customer base is limited unless Palantir offers cheaper software to capture the bottom end of the market. Still, if a company devotes 1% of its total revenue to Palantir's software (assuming a $2 million annual spend), then any company with greater than $200 million in revenue could afford Palantir's software. There are thousands of companies that meet that guideline, so Palantir could still meet that expectation. PLTR Revenue (TTM) data by YCharts To do some quick math, if Palantir were to trade for 13 times sales (the same level that Adobe, the gold standard for software companies, trades at), it would need about $98.2 billion in revenue for the stock to increase by 20 times from this point. Because of Palantir's expensive starting valuation, its sales would have to increase by 41 times its current level. If you just use commercial customers, that means it would need over 49,000 customers. That's a very tall task, considering that Palantir only has 262 customers in the U.S. and 427 worldwide. So, unless every company adopts Palantir software and spends heavily on it, there's little chance that a $50,000 investment in Palantir will become $1 million. Should you invest $1,000 in Palantir Technologies right now? Before you buy stock in Palantir Technologies, consider this: The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now... and Palantir Technologies wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years. Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $741,989!* Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Keithen Drury has positions in Adobe. The Motley Fool has positions in and recommends Adobe 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.

Could Investing $50,000 in Palantir Stock Make You a Millionaire? | The Motley Fool

Palantir has a massive growth runway due to its small customer base, but is it big enough? Finding the next stock that could make you a millionaire is obviously a draw for many people. However, it's rare to find a company that actually has the potential to grow as large as it needs to become to allow you to become a millionaire from one investment. To turn $50,000 into $1 million, the stock would need to rise by 20 times. That's a tall order, a feat that few companies ever accomplish. One stock that some have pointed out with this potential is Palantir (PLTR -0.21%), as its artificial intelligence (AI) software could become widespread. So, could a $50,000 investment in Palantir make you a millionaire? Part of Palantir's draw is its dual customer structure. Originally, Palantir only created software for government use. This lucrative market for Palantir still makes up over half of its revenue. However, Palantir recognized the use case for its AI software outside of pure government use and expanded onto the commercial side, which has seen phenomenal growth. Palantir's software can be deployed in practically any industry, as the simple concept of data in, insights out is how Palantir works. So whether an intelligence agency is using it to locate a terrorist (which Palantir reportedly helped do with Osama bin Laden), efficiently scheduling hospital staff, or optimizing a supply chain, Palantir has customers covered. Its latest product, Artificial Intelligence Platform (AIP), has been a huge success, as it allows customers to build AI solutions into every facet of a business. According to management, the demand for AIP has been "unprecedented" and is a huge reason why its U.S. commercial customer revenue rose 40% year over year in the first quarter. But does all of this add up to a stock that can increase by 20 times? Despite Palantir generating $634 million in revenue in Q1, its customer base is relatively small. In the U.S., Palantir only had 262 customers. There are far more companies in the U.S. than that, so Palantir's growth runway is quite large. However, one drawback to Palantir's software is its cost. By dividing U.S. commercial revenue by U.S. commercial customer count, you'd get the average price spent per customer. That figure is $573,000. Remember, that's only quarterly revenue, so the annual cost would be north of $2 million. Not every company can afford that, so its customer base is limited unless Palantir offers cheaper software to capture the bottom end of the market. Still, if a company devotes 1% of its total revenue to Palantir's software (assuming a $2 million annual spend), then any company with greater than $200 million in revenue could afford Palantir's software. There are thousands of companies that meet that guideline, so Palantir could still meet that expectation. To do some quick math, if Palantir were to trade for 13 times sales (the same level that Adobe, the gold standard for software companies, trades at), it would need about $98.2 billion in revenue for the stock to increase by 20 times from this point. Because of Palantir's expensive starting valuation, its sales would have to increase by 41 times its current level. If you just use commercial customers, that means it would need over 49,000 customers. That's a very tall task, considering that Palantir only has 262 customers in the U.S. and 427 worldwide. So, unless every company adopts Palantir software and spends heavily on it, there's little chance that a $50,000 investment in Palantir will become $1 million.