In 2024, data analytics firm Palantir Technologies (PLTR 0.18%) was one of the top performers in the S&P 500 (SNPINDEX: ^GSPC), with its shares gaining more than 340%. After such a meteoric rise, you might think that Wall Street analysts would advise shareholders to trim their positions and lock in some gains.

However, veteran analysts Dan Ives of Wedbush Securities and Mariana Perez Mora of Bank of America remain two of the strongest Palantir bulls on Wall Street.

Moreover, the company just received perhaps its most optimistic call yet from Loop Capital Markets.

Loop Capital sees major upside in Palantir stock

Rob Sanderson is an equity research analyst at Loop Capital Markets. In late February, he initiated coverage on Palantir stock with a buy rating.

And while plenty of analysts view Palantir stock as a buy, Sanderson set himself apart from the pack with an aggressive 12-month price target of $141 per share, implying roughly 60% upside from current trading levels. As of this writing, Loop's price target is the highest on Wall Street among analysts covering Palantir.

Image source: Getty Images.

Valuation is a valid concern

One of the most obvious concerns investors may have about putting money into Palantir is its valuation. Sure, the stock rose by 340% last year -- but what does that really mean?

PLTR PS Ratio data by YCharts.

As illustrated in the chart above, Palantir's valuation metrics are pretty hard to make sense of. While growth stocks, particularly in the software space, tend to carry premium valuations, the price-to-sales (P/S) and price-to-earnings (P/E) ratios above are abnormally rich.

In essence, Palantir experienced such high degrees of valuation expansion over the last year that traditional benchmarks just aren't that useful when assessing an investment in it.

In Sanderson's research note, he compares Palantir to companies such as Adobe and Salesforce. While neither of them competes with Palantir directly, I see both software giants as decent comparable businesses. My rationale is that Adobe and Salesforce dominate their respective core markets -- namely, web design and customer relationship management. While plenty of competition exists in both of these spaces, Adobe and Salesforce have built such integrated, sticky ecosystems that each is like a pseudo-monopoly.

Palantir has a long way to go before it reaches the scale of Adobe or Salesforce (despite the closeness of their respective valuations). For this reason, to buy Palantir stock right now requires an investor to at some level buy into the long-term narrative that the company will one day become a software giant. And valuing narratives accurately is an impossibly tall order.

Why Palantir could keep soaring

I don't have a crystal ball that can tell me whether or not Palantir will reach Sanderson's price target of $141 per share a year from now. Nevertheless, I'm not so concerned about the specifics surrounding its upside potential.

As an investor in Palantir myself, my primary focus is learning about the company's growth roadmap. Last year, it grew its total customer base by 43% and increased its private sector clients by 52%. If Palantir keeps up its current paces of customer acquisition, revenue growth, and profit acceleration, it could emerge as the de facto leader in AI data analytics -- in which case, the company's lofty valuation could be justifiable.

PLTR Revenue (Quarterly) data by YCharts.

In my view, Palantir's integrated suite of AI platforms is helping it create an unparalleled ecosystem -- one that is becoming more difficult for even tech's largest players to compete with. For these reasons, I consider it a compelling opportunity for long-term investors.

Despite how pricey it may be by some measures, this appears to be a rare opportunity to scoop up Palantir stock as it takes what I expect to be a minor breather from what has otherwise been a prolonged upward journey.