Palantir Technologies stock plunged 14% on Tuesday morning following the company’s first-quarter financial results. Despite solid performance driven by increasing demand for its artificial intelligence platform, AIP, the market had higher expectations. Palantir reported revenue climbing 39% to $884 million, with its customer count increasing by 39% to 769.
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Existing customers spent 124% more on average. Adjusted earnings per diluted share increased by 62% to $0.13.
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Chief Revenue Officer Ryan Taylor attributed these results to “unrelenting demand” for Palantir’s AIP platform, known for its capability to operationalize AI effectively.
Management raised its full-year guidance, now forecasting a 36% revenue increase for 2025, up from an initial 30%. However, the stock’s sharp decline post-report shows that investors were expecting even more.
Stock reaction to earnings report
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Dan Ives, a technology analyst at Wedbush Securities, remains bullish, believing Palantir’s unique data analytics platforms position it well to capitalize on the AI revolution. “I believe this is going to a trillion-dollar market cap in the next two to three years,” he stated, forecasting a 300% surge from its current market value of $250 billion. Not all analysts share Ives’ optimism.
The consensus estimate suggests Palantir’s adjusted earnings will grow at 26% annually through 2026, making its current valuation of 230 times earnings appear excessive. Many analysts consider the stock overvalued, with a median target price of $98 per share, implying an 8% downside from its current price of $107. While there’s disagreement among analysts, Palantir’s long-term potential remains a topic of interest.
Some see a path towards significant growth, suggesting that patient investors might consider buying a small position if they are comfortable with potential short-term volatility. In conclusion, while Palantir’s recent earnings report has caused immediate stock volatility, the company’s long-term potential underpinned by its strong AI capabilities and unique data platforms makes it a compelling proposition for certain investors eyeing substantial future gains.
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