Down 40%, This Incredibly Cheap AI Stock Could Start Soaring After May 1

The AI revolution has created both winners and losers in the stock market, but one name stands out as a prime candidate to rebound strongly after May 1: Palantir Technologies (PLTR). The company’s stock has plummeted nearly 40% from its February 2025 peak, but a critical earnings report on May 5, 2025, could spark a dramatic reversal. Here’s why investors should pay attention.

Why PLTR Fell 40% — and Why It Could Rebound

Palantir’s decline began in late 2024 amid concerns over U.S. defense budget cuts and the broader economic impact of global tariffs. The stock peaked at $125 in February 2025 after soaring 340% in 2024, making it the top performer in the S&P 500. However, fears of reduced AI infrastructure spending and geopolitical uncertainty pushed shares down to around $80 by April 2025, a 36% drop from its high.

Yet PLTR’s fundamentals remain robust. The company is a leader in AI-powered data analytics, with contracts spanning government, healthcare, and commercial sectors. Its ontology-based software helps clients like the U.S. Department of Defense and energy firms make sense of vast datasets—a skill increasingly critical in an AI-driven world.

The May 5 Catalyst: Earnings with AI-Driven Momentum

The May 5, 2025 earnings report is the key catalyst. Analysts expect $0.13 EPS, a 62% year-over-year increase from Q1 2024’s $0.08. More importantly, the results will test whether Palantir’s Q4 2024 performance—which included 36% revenue growth, a $1.8 billion total contract value (TCV), and record $517 million in free cash flow—is sustainable.

If PLTR exceeds these estimates, investors could see a repeat of its February 2025 surge, when shares jumped 24% the day after Q4 results. Management’s FY 2025 revenue guidance of $3.749 billion (+31% year-over-year) also hinges on Q1’s execution.

Why PLTR’s AI Play Is Underappreciated

1. AI-Driven Demand: Palantir’s software is critical for industries adopting AI. Its U.S. government revenue rose 52% in Q4 2024, fueled by defense contracts. Commercial clients, including energy and healthcare firms, are also ramping up AI investments.
2. High Margins and Cash Flow: The company’s adjusted free cash flow margin hit 63% in Q4, well above rivals. This profitability suggests it can weather macroeconomic headwinds.
3. Valuation Discount: At a 7x forward revenue multiple, PLTR trades at a fraction of peers like Snowflake (SNOW) (17x) or Datadog (DDOG) (22x), despite its proven AI traction.

Risks to Consider

• Defense Budget Uncertainty: A slowdown in U.S. government spending could hit PLTR’s top line.
• Tariff-Related Volatility: Global trade policies, particularly in semiconductors, could disrupt AI infrastructure investments.
• Stock Volatility: PLTR’s history shows wild swings post-earnings (e.g., a -15% drop in May 2024, followed by a 20% rebound).

The Bottom Line: A High-Reward Opportunity

Palantir’s $8 billion market cap is a steal for a company with $1.8 billion in contracted future revenue and AI solutions in high-growth sectors. The May 5 earnings are a make-or-break moment, but the fundamentals—strong cash flow, expanding TCV, and AI tailwinds—suggest the downside is limited.

If the stock recovers to its $125 peak, that’s a 56% upside from April 2025 levels. Even a partial rebound to $100 (a 25% gain) would align with its 12-month consensus price target. For investors willing to bet on AI’s long-term potential—and a near-term catalyst—PLTR offers a compelling risk/reward profile.

Conclusion: Palantir’s 40% decline has created an entry point for investors eyeing AI’s future. With its Q1 earnings around the corner and a backlog of AI-driven contracts, PLTR is primed to soar—if it delivers. The May 5 report will be the litmus test, but the data supports a bullish stance on this undervalued AI leader.