3 Reasons Why PLTR Stock Is Lower Despite Earnings Beat
Palantir Technologies (PLTR) exceeded analyst earnings expectations in the first quarter on record revenue, but it just wasn’t enough: shares slipped 5% in early trading Tuesday.
Palantir, whose software and AI platforms help government and commercial customers glean intelligence from data, reported stellar quarterly growth. Palantir said weakness in commercial revenue this quarter was due to a customer program converting to the U.S. government side of its books. All this may make lofty valuations less attractive. At roughly $144, PLTR stock trades at roughly 40 times book value and more than 160 times earnings, according to recent Bloomberg estimates.
Here’s a filter on Palantir revenue, earnings and guidance from Wall Street analysts:
Earnings: Summary from RBC Capital Markets: “1Q revenue of (+85% YoY) beating consensus by 5.9%, adjusted operating margin 60.2% (vs. consensus 56.8%), and adjusted earnings per share of $0.33 (vs. consensus $0.28). Both Commercial (+95% YoY) and Government (+76% YoY) segments beat estimates.”
Revenue, Summary from Jefferies: “Total revenue grew 85% year/year and 16% quarter/quarter to $1.63B, accelerating from 70% y/y growth in 4Q. U.S. revenue grew 104% y/y and 19% q/q to $1.28B, driven by continued AIP demand, while U.S. Government growth accelerated to 84% y/y (vs 66% in 4Q).”
Guidance, Summary from RBC: “F2Q26 Revenue guidance (+79% at the midpoint) and adjusted operating margin guidance (59.2%) (ahead of consensus). For FY26: 1) Total revenue (+71% at the midpoint) and U.S. Commercial revenue (+ at least 120% YoY growth) raised above consensus; 2) Adjusted operating income dollars raised, implied 58% adjusted operating margin guidance was maintained (in line with consensus); and adjusted free cash flow guidance raised to $4.2B-$4.4B (above consensus).”
Here’s what three analysts and observers, bulls and bears, are saying as the stock moves lower:
Tiernan Ray, owner and editor, The Technology Letter: “My view is that PLTR continues to top expectations with strong growth, but the margin by which the company has exceeded expectations has gotten smaller. As a result, the valuation multiples have compressed drastically. Although the stock is still expensive, it is reverting to the mean, meaning, heading from an exceptionally high valuation to a much lower average valuation for a software stock.”
Jefferies Analysts Brent Thill, Bo Yin and ShengQi Lin: “What we are watching: GTM scalability. “Management again emphasized that PLTR is doubling the U.S. with ‘functionally a nonexistent sales force,’ with [CEO Alex] Karp referencing roughly 70 salespeople and only 7 that ‘really sell.’ The risk is that the same constraint that supports scarcity and pricing power could also limit how quickly PLTR captures broader enterprise demand.”
Wedbush Analysts Dan Ives, Steven Wahrhaftig, Sam Brandeis, Anish Jog and Chase Tohanczyn: “The company beat the Street across all FY2Q26 metrics while raising its FY26 guidance across the board (yet again) including commentary around FY27 U.S. commercial growth as the company continues to capitalize on elevated demand for its AI capabilities while focused on driving leverage into its business to drive further profitable growth. … Palantir remains one of our top tech names to own in 2026 and this quarter represents yet another validation moment for PLTR by continuously generating unprecedented traction for across the federal and commercial landscapes.”
Listen to our discussion on the Palantir outlook here: Palantir (PLTR) Earnings to Show Software Differentiation in AI Trade | Schwab Network
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