Palantir Stock Plummets Despite Record Revenue Growth and Topping Wall Street Expectations

On May 6, 2025, Palantir Technologies (PLTR) experienced a significant decline, with its stock price dropping by 12.05% over two consecutive days, resulting in a total decrease of 12.41%. This downturn occurred despite the company's strong first-quarter earnings report, which showed robust revenue growth and exceeded Wall Street's expectations.

Investors scrutinized Palantir's valuation and declining sales in its international business, leading to the stock's decline. The company's first-quarter earnings report revealed adjusted earnings per share of 13 cents, meeting expectations, and revenue of $884 million, surpassing the anticipated $863 million. This marked a 39.3% year-over-year increase in revenue and a 62.5% increase in earnings.

Palantir's strong performance was driven by its Artificial Intelligence Platform (AIP) software suite, which saw increased adoption. The company also raised its full-year revenue guidance to 36% year-over-year growth and adjusted its operating income and free cash flow targets upward. Despite these positive developments, the stock's pullback highlights the risks associated with its growth-dependent valuation.

Palantir's U.S. commercial revenue grew by 71% year-over-year, contributing significantly to the overall revenue increase. The company's forward guidance suggests continued strong momentum, with projected sales for the year between $3.89 billion and $3.9 billion, up from the previous range of $3.74 billion to $3.76 billion. The adjusted operating income target was also raised to between $1.711 billion and $1.723 billion, and annual free cash flow is expected to be between $1.711 billion and $1.723 billion.