Shares of Palantir (PLTR) are down more than 13% at the time of writing, even after the AI software company reported accelerating revenue growth. While earnings and revenue topped expectations, some investors were unimpressed with the modest full-year revenue guidance increase, a decline in margins from the previous quarter, and a drop in international commercial revenue. Unsurprisingly, analyst Louie DiPalma from William Blair noted that Palantir’s high valuation makes it more sensitive to any worries about slowing growth, which can ultimately lead to huge drops.
Still, Palantir delivered strong numbers overall. It reported adjusted earnings of $0.13 per share on $884 million in revenue, beating analyst expectations. Revenues grew 39% from $634 million in the same quarter last year, while net income more than doubled to $214 million. Palantir also raised its full-year revenue forecast to between $3.89 billion and $3.90 billion. Interestingly, CEO Alex Karp was upbeat on the earnings call, saying that “Palantir is on fire” and that the results are a payoff from years of investment and cultural shifts in the U.S.
Despite the positive results, Wall Street remains cautious. Palantir has been one of the best-performing stocks, especially in 2024, which has pushed its valuation higher and raised expectations. However, the stock has also been volatile, as it has been affected by broader market worries like new tariffs from President Donald Trump. In addition, RBC analyst Rishi Jaluria said that guidance was ahead of expectations, but questioned whether estimates are already fully priced into the stock. Interestingly, it is worth noting that Jaluria has a $40 price target on PLTR stock, which implies -62.5% downside risk.
Is PLTR Stock a Buy?
Overall, analysts have a Hold consensus rating on PLTR stock based on two Buys, eight Holds, and three Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average PLTR price target of $89.17 per share implies 16.4% downside risk.
