Palantir Technologies (PLTR) saw its stock fall 12% on Tuesday, as investors reacted to a sharp miss in its international commercial revenue and growing concerns over the company’s valuation.
While first-quarter revenue surpassed Wall Street expectations overall, a 5% year-over-year decline in international commercial sales totaling $142 million versus estimates of $160 million cast a shadow over the report.
The sell-off erased roughly $35 billion in market capitalization. Despite the drop, Palantir shares remain up more than 45% over the past month and had surged more than 60% year-to-date heading into earnings.
From our end, we exited our Palantir position a few weeks ago not out of conviction against the company’s long-term potential, but out of caution. The volatility introduced by the current tariff uncertainty and the stock’s premium valuation prompted us to reallocate capital toward value names and near-term trading opportunities. Even so, our Palantir trade was a success: we began accumulating shares near its IPO and averaged in heavily on dips below $10.
Long-term, our belief in Palantir’s mission and strategic importance remains unchanged. This is a company we view as one of the most consequential software businesses of our time.
However, we have to be intellectually honest: Palantir’s valuation currently exceeding that of Coca-Cola, despite generating only a fraction of the revenue raises legitimate concerns. At some point, fundamentals and pricing need to reconcile.
For those still holding the stock, we’d advise at minimum a reassessment of position sizing. Taking profits after a run of this magnitude is prudent, especially given the company’s lofty valuation multiples.
In the following breakdown, we provide our regular coverage of Palantir’s earnings, as we’ve done consistently over the past four years.
As discussed above, we continue to believe Palantir (PLTR) is meaningfully overvalued. Heading into its latest earnings release, the stock was trading at approximately 238x forward earnings estimates—a staggering premium compared to other AI bellwethers. For perspective, Nvidia and Broadcom—leaders in AI hardware—trade at 26x and 31x forward earnings, respectively.
This valuation gap raises fundamental questions. While Palantir’s business model is distinct, its current multiple prices in near-flawless execution. Even a modest 4% revenue guidance hike for 2025 failed to impress a market accustomed to higher upside surprises. In an environment where premium valuations are increasingly difficult to sustain, Palantir is vulnerable to even modest disappointment.
We’re presenting a two-sided framework here: on the bearish end, we see potential downside to the $40–$50 range, especially if macro conditions deteriorate or if Palantir hits any growth hiccups. That’s the zone we would reconsider re-entry. On the bullish side, while not entirely grounded in fundamentals, we acknowledge the possibility of a speculative move toward $145 by year-end, given how the stock has traded through 2025.
Despite our cautious stance, we remain long-term admirers of the company’s mission. Palantir is unlike any other Silicon Valley name—it was born in defense, not in consumer apps or SaaS. That legacy continues to define its value proposition and market perception. Few companies wield as much influence behind the scenes in both government and commercial data strategy.
Still, discipline matters. With Palantir at all-time highs, we reiterate a Sell/Hold rating. We’ve captured significant gains here, and this is not the time to chase. Valuations this rich rarely remain immune to gravity.
Palantir (PLTR) posted a decent first quarter, beating top-line expectations and showing growth in its U.S. commercial and government segments.
Total revenue came in at $884 million, ahead of Wall Street’s $863 million estimate.
The upside was fueled by a 71% year-over-year surge in U.S. commercial revenue, highlighting growing demand from major enterprise clients such as Citi, Hertz, and BP.
Meanwhile, U.S. government revenue climbed 45%, reinforcing Palantir’s embedded position in defense and national security.
International performance was equally encouraging. The company’s government revenue from abroad rose 44% to $114 million, topping consensus and demonstrating continued traction in Europe—a market where Palantir has historically enjoyed deep institutional ties.
Profitability highlights:
GAAP operating income: $176 million
Adjusted operating income: $391 million
GAAP net income: $214 million
Adjusted net income: $334 million
GAAP EPS: $0.08
Adjusted EPS: $0.13 (in line with estimates)
Overall, the quarter showed strength in both growth and profitability, reinforcing Palantir’s role as a critical software partner across both public and private sectors.
That said, valuation remains the elephant in the room. As the company scales, investors will expect continued execution but also increasingly rational pricing.
Palantir reported39% year-over-year revenue growth, with total revenue reaching $884 million, up from $634.3 million in the same period a year ago. The gains were driven primarily by continued strength in U.S. operations, where revenue surged 55% to $628 million.
Net income more than doubled, rising to $214 million or $0.08 per share, compared to $105.5 million or $0.04 per share in the prior-year quarter.
On the profitability and cash generation front, the company raised its adjusted free cash flow guidance to between $1.6 billion and $1.8 billion for the year.
Adjusted operating income is now expected to range from $1.711 billion to $1.723 billion—a meaningful upgrade reflecting higher operating leverage.
Palantir also demonstrated strong deal momentum:
139 deals were closed in the quarter valued at $1 million or more
Of those, 51 deals were worth at least $5 million
31 deals exceeded $10 million
The quarter reinforces Palantir’s deepening commercial and government traction and its growing ability to convert top-line growth into meaningful bottom-line performance.
Palantir said that its commercial revenues grew 71% from a year ago to $255 million, while its government segment sales jumped 45% to $373 million.
The company is forecasting that U.S. commercial revenues will top $1.178 billion this year.
Palantir Technologies (PLTR) lifted its full-year 2025 revenue guidance to a range of $3.89 billion to $3.9 billion, up from its previous estimate of $3.75 billion. The revision underscores the company’s confidence in sustained momentum across both commercial and government segments.
Operationally, Palantir reported robust cash flow performance:
Operating cash flow came in at $310 million, marking a 139% increase year-over-year
Adjusted free cash flow totaled $370 million, up 149% from the prior-year period
The company ended the quarter with $5.4 billion in cash, cash equivalents, and short-term investments, up from $5.2 billion in the prior quarter, and continues to operate with zero long-term debt.
The results further reinforce Palantir’s financial resilience and growing efficiency in translating topline growth into meaningful cash generation.
Loop Capital Maintains Buy on Palantir Technologies, Raises Price Target to $130
DA Davidson Maintains Neutral on Palantir Technologies, Raises Price Target to $115
Goldman Sachs Maintains Neutral on Palantir Technologies, Raises Price Target to $90
Morgan Stanley Maintains Equal-Weight on Palantir Technologies, Raises Price Target to $98
UBS Maintains Neutral on Palantir Technologies, Raises Price Target to $110
Cantor Fitzgerald Maintains Neutral on Palantir Technologies, Raises Price Target to $110
Mizuho Maintains Underperform on Palantir Technologies, Raises Price Target to $94
