Palantir Stock Falls More Than 12 Percent Despite Strong Earnings, Guidance

Palantir Technologies Inc. shares lost more than 12 percent in the May 6 trading session despite strong earnings and crushing guidance a day earlier, on concerns that the company’s market valuation is running ahead of its growth potential.

On May 5, the Denver-based builder of software platforms for the intelligence community reported a 39 percent revenue jump in the first quarter from a year earlier and a 7 percent increase from the previous quarter to $884 million.

U.S. commercial revenues led the gains, soaring 71 percent year-over-year and 19 percent quarter-over-quarter, to $255 million. In addition, the company gave robust guidance for the year, crushing market expectations.

Palantir CEO Alexander C. Karp highlighted its strategic positioning for the artificial intelligence (AI) era and rosy outlook for the rest of the year.

“We are delivering the operating system for the modern enterprise in the era of AI,” he said in a statement. “Consequently, we are raising our full-year guidance for total revenue growth to 36 percent and our guidance for U.S. commercial revenue growth to 68 percent.”

“Customers are getting started, then expanding in quick succession,” Ryan Taylor, chief revenue officer and chief legal officer, said during the earnings call, referring to several deals the company made recently.

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However, Palantir’s shares fell 12.05 percent to close at $108.86 on May 6. The stock has risen more than 331 percent over the past year, compared with a gain of about 8 percent for the S&P 500 index.

That makes the company’s shares appear very expensive based on traditional valuation metrics, suggesting that the stock’s gains are outpacing its growth prospects—helping explain Wall Street’s adverse reaction to the first-quarter earnings report.

Sidharth Ramsinghaney, director of strategy and operations at Twilio, said Palantir’s latest earnings underscore how AI is reshaping enterprise software economics.

However, he sees the disconnect between Palantir’s exceptional execution and the market reaction, revealing the complex tension between growth potential and valuation fundamentals.

“The market is grappling with a fundamental question: can Palantir maintain 50%+ growth rates as it scales to $10+ billion in revenue?” he told The Epoch Times via email.

“History suggests this is exceedingly rare, as the law of large numbers eventually constrains even the most exceptional businesses. When evaluating Palantir as an investment rather than a growth story, the substantial gap between current fundamentals and market expectations creates significant vulnerability to any growth deceleration.”

Ramsinghaney commended the company’s strategic positioning in the AI Landscape. “Palantir has masterfully positioned itself at the intersection of operational AI and enterprise data integration,” he said.

“Unlike pure LLM providers, they’re focused on the practical application layer—putting AI to work on real business problems with measurable Return on Investment (ROI). Their expansion into healthcare, covering 30 percent of U.S. hospital beds, demonstrates how they’re systematically capturing mission-critical workflows across sectors.”

In addition, he believes the acceleration in U.S. commercial revenue confirms the company’s competitive edge.

“As enterprises move from AI experimentation to production deployment, Palantir’s decade of experience working with complex government data environments has become a competitive advantage rather than a limitation,” he said. “The revised guidance of 68 percent growth in U.S. commercial revenue signals their confidence in this strategic shift.”

“The most compelling aspect of Palantir’s story isn’t just their current growth but their disciplined expansion from government to commercial use cases,” he said. “Whether this strategic execution can outrun the mathematical constraints of their valuation remains the central question for investors.”