Palantir Technologies (PLTR) Stock Drops: Is the AI Darling Losing Its Shine?

TLDR

Palantir reported Q1 revenue of $884 million (up 39% YoY) with EPS of $0.13 (up from $0.08 YoY) The company raised its full-year outlook to $3.9 billion, with U.S. commercial revenue growth forecasted at 68% Despite strong results, shares fell more than 9% in after-hours trading U.S. commercial revenue grew 71% YoY, driven by high demand for Palantir’s AI Platform Technical analysis suggests watching support levels at $97, $83, and $66

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Palantir Technologies reported its first-quarter earnings on Monday, triggering a sharp sell-off despite raising its full-year outlook. The data analytics company posted revenue of $884 million, representing a 39% year-over-year increase and beating analyst expectations.

Adjusted earnings per share came in at $0.13, up from $0.08 a year earlier, matching Wall Street estimates. However, investors appeared to want more from the AI darling, which had delivered blowout results in previous quarters.

The stock dropped more than 9% to $112.32 in after-hours trading on Monday. This reaction came despite Palantir raising its full-year revenue guidance to $3.9 billion from the previous $3.75 billion forecast.

Before the earnings release, Palantir’s stock had been on a remarkable run. Shares were up 64% since the start of the year and had surged more than five-fold over the past 12 months.

Palantir Technologies Inc. (PLTR)

Growth Drivers and Customer Metrics

The company’s growth continues to be fueled by its AI offerings, particularly in the U.S. commercial segment. This division saw revenue soar 71% year-over-year and 19% sequentially, exceeding management’s guidance of at least 54% growth.

U.S. government revenue also showed strong performance, jumping 45% compared to the same period last year. The company’s customer count grew 39% year-over-year, with U.S. commercial customers increasing by 65%.

Palantir closed 139 deals worth at least $1 million during the quarter. Of these, 51 were valued at $5 million or more, and 31 exceeded $10 million in value.

The company’s remaining performance obligation (RPO) – representing contractually obligated future sales – climbed 46% year-over-year to $1.9 billion. This growth rate outpacing current revenue signals a strong foundation for future expansion.

CEO Alex Karp described the move to AI as having “evolved into a ravenous whirlwind,” with companies adopting large language models in what he called “a stampede.”

Palantir’s Artificial Intelligence Platform (AIP) has become a key driver of its success. The company runs “boot camps” where Palantir engineers work directly with users to deploy AI solutions for real-world business problems.

These sessions have proven highly effective, often resulting in multi-million dollar deals within weeks or months of attendance.

Technical Analysis and Price Levels

From a technical standpoint, Palantir’s stock recently rallied to its highest level since mid-February but encountered selling pressure around its record high. This pattern could signal a “double top” formation.

Investors may want to watch several key support levels. The $97 level, currently positioned slightly above the 50-day moving average, could attract buying interest.

If the stock breaks below $97, the next support level to watch would be around $83, near a trendline connecting last year’s December peak and a period of sideways movement that preceded the stock’s early-February gap up.

A more substantial pullback could take the shares down to the $66 level, near the 200-day moving average and last month’s swing low.

During potential upswings, investors should monitor resistance around $125, which sits just above Monday’s close and near the stock’s record high from February.

Valuation Concerns

Despite Palantir’s strong execution, Wall Street has expressed concerns about the company’s high valuation. Of 25 analysts offering opinions in May, only three rate it a buy or strong buy, while 15 rate it a hold, and six have underperform or sell ratings.

The stock currently trades at 398 times earnings and 65 times sales, metrics that most would consider extremely high. These frothy multiples have contributed to significant volatility in the stock price.

Between mid-February and early April, Palantir stock plunged 41% without any company-specific news, highlighting the risks for investors.

The long-term potential remains substantial, with generative AI expected to contribute between $2.6 trillion and $4.4 trillion to the global economy over the coming decade, according to McKinsey & Company.

For the full year 2025, Palantir now projects revenue of $3.9 billion, representing year-over-year growth of 36% at the midpoint of guidance. The U.S. commercial segment is expected to grow by at least 68%, up from the previous forecast of 54% growth.

The most recent trading data shows Palantir shares fell sharply after hours despite the company beating revenue expectations and raising its full-year outlook.

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