Palantir (PLTR -10.08%) has been one of the hottest stocks on Wall Street, rising nearly 600% since the start of 2024. That's an incredible return in just over a year, and it has made Palantir one of the highest-valued software stocks on the market.

However, its business growth hasn't quite kept up with its stock returns, as its revenue is only up 29% in that same period. As a result, I think Adobe (ADBE -1.53%) stock could be bigger than Palantir by the end of 2025.

This prediction isn't about Adobe suddenly growing and challenging Palantir to a growth race; it's about realistic stock valuations.

Palantir has gotten a ton of attention due to its focus on artificial intelligence (AI) software. Many companies and government entities have turned to Palantir to deploy its data analytics software, as it has a proven track record of success. Palantir also has its Artificial Intelligence Platform (AIP) product that has become a hit among many of its new clients. AIP allows its users to integrate its AI-powered analysis throughout a company's inner workings, taking AI from a tool that's used on the side to one that's fully integrated. Additionally, AIP allows its users to deploy AI agents that can automate some of the tasks humans traditionally did.

Adobe is much better known, as its creative design software suite has become the industry standard in any field that requires graphics design. Adobe hasn't fallen behind in the AI arms race either, as it has created multiple tools that allow its users to harness the power of generative AI to modify graphics or create new ones.

Each company is dominant in its respective field, but Adobe has a much bigger head start on Palantir. Over the past 12 months, Adobe has generated around 7.5 times as much revenue and 12 times as much profit as Palantir.

A reasonable analysis would conclude that Adobe should be valued at a higher level than Palantir just due to its size. However, that's not the case. At recent prices, Palantir's market cap is $268 billion, while Adobe's is $199 billion. That's quite the disconnect from conventional thinking.

So, how is Palantir valued more than Adobe right now? It all has to do with growth expectations.

The area where there is no debate Palantir is beating Adobe is its revenue growth rate. While Palantir's revenue growth has accelerated over the past 12 months, Adobe's hasn't.

This has caused investors to be incredibly bullish on Palantir's stock while turning bearish on Adobe's. While I agree with both sentiments, I completely disagree with the valuations the two companies have attained.

To compare the two, let's project what they may look like five years down the road. For 2025 and 2026, Wall Street analysts project 32% and 26% revenue growth for Palantir, but let's just throw reasonable expectations out the window. Instead, we'll say that Palantir can grow its revenue at a 40% pace for the next five years.

Adobe's revenue growth projections for next year are 10%, but let's artificially tweak it down to 8% growth over the next five years.

Clearly, I'm stacking the odds in Palantir's favor, but it doesn't matter. After five years, Palantir would have $15.4 billion in revenue, not even enough to catch Adobe's current total. Adobe would have $31.5 billion in revenue after five years, still double what Palantir has. It would take nearly eight years for Palantir to catch Adobe at these respective growth rates.

So, even if I artificially inflate Palantir's growth rate to a level that management isn't projecting and sustain it for an incredibly long time (nearly eight years), it still wouldn't be as large as Adobe is now.

This just illustrates how ridiculously high Palntir's stock is valued right now. Investors need to be careful, as it could revert to a more reasonable valuation any day now.