Palantir Technologies (PLTR) Stock: Why Investors Snubbed 39% Revenue Growth

TLDR

Table of Contents

Palantir reported Q1 revenue of $884 million (up 39% YoY) with adjusted EPS of $0.13
Stock fell over 9% in after-hours trading despite raising full-year outlook
U.S. commercial revenue surged 71% YoY, driven by strong AI platform adoption
Customer count grew 39% YoY with 139 deals worth at least $1 million closed
Technical analysis indicates potential double top pattern with support levels at $97, $83, and $66

Palantir Technologies (PLTR) released its first-quarter earnings report on Monday, revealing mixed results that sent shares tumbling in after-hours trading despite raising its full-year outlook. The data analytics company reported revenue that beat expectations but earnings that merely matched analyst estimates, disappointing investors who had grown accustomed to blowout results.

The company posted revenue of $884 million for Q1, representing a 39% increase year-over-year and exceeding analyst consensus. Adjusted earnings per share came in at $0.13, up from $0.08 a year earlier, in line with Wall Street estimates.

Despite these solid numbers, Palantir’s stock fell more than 9% to $112.32 in after-hours trading. The reaction highlights the high expectations baked into the stock, which had risen 64% since the start of the year and more than five-fold over the past 12 months.

🚨 Palantir $PLTR Q1 earnings…
• Q1 revenue: $884M (+39%) — beat expectations
• EPS matched at $0.13
• U.S. gov revenue +45%, commercial +71%
• Full-year guidance raised to ~$3.9B
• Stock down over 13% from yesterdays highs
Expectations were HIGH👀 pic.twitter.com/pF55cGb2E3
— Trader Edge (@Pro_Trader_Edge) May 6, 2025

The company’s U.S. commercial revenue was particularly strong, jumping 71% year-over-year and 19% sequentially. This far exceeded management’s previous guidance for growth of at least 54%. U.S. government revenue also showed healthy growth, increasing by 45%.

Palantir’s Artificial Intelligence Platform (AIP) appears to be the main growth driver. CEO Alex Karp described the move to AI as evolving into “a ravenous whirlwind” with companies adopting large language models in what he called “a stampede.”

Customer Growth Fuels Revenue Surge

Palantir’s customer metrics showed strong momentum across the board. The company’s total customer count increased by 39% year-over-year, with U.S. commercial customers growing by an impressive 65%.

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

These large contracts are building a foundation for future growth. Palantir’s remaining performance obligation (RPO) – representing contractually obligated sales not yet recognized as revenue – grew 46% year-over-year to $1.9 billion. This faster growth in RPO compared to current revenue suggests strong momentum for future quarters.

The company’s “boot camps,” which pair Palantir engineers with users to implement AI solutions for real business problems, have proven effective at generating new deals. Many seven and eight-figure contracts were signed within weeks or months after attendance.

Based on this performance, Palantir raised its full-year revenue guidance for 2025 to $3.9 billion, up from the previous forecast of $3.75 billion. This represents expected year-over-year growth of 36%. The U.S. commercial segment is now expected to grow by at least 68%, a significant increase from the 54% growth previously forecast.

Technical Outlook and Valuation Concerns

From a technical perspective, Palantir’s stock recently rallied to its highest level since mid-February but encountered selling pressure around its record high. This could signal a double top pattern forming, which often precedes further price declines.

Investors should monitor several key support levels on Palantir’s chart. The $97 level, currently slightly above the 50-day moving average, represents the first potential support area. If broken, the stock could fall to around $83, near a trendline connecting last year’s December peak. A more severe retracement could take the shares down to $66, near the 200-day moving average.

On the upside, the $125 level represents key overhead resistance, situated just above Monday’s close and near the stock’s February record high.

Despite Palantir’s strong execution, Wall Street remains cautious about the company’s lofty valuation. Of the 25 analysts covering the stock 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 is currently trading at 398 times earnings and 65 times sales, multiples that many investors consider excessive. This high valuation has contributed to extreme volatility in the stock price. Between mid-February and early April, Palantir shares plunged 41% without any company-specific news.

The latest quarterly results and raised guidance reaffirm Palantir’s position as a leading AI company. However, the stock’s reaction shows that even strong growth may not be enough to satisfy investors who have come to expect spectacular results.

Palantir closed 139 deals worth at least $1 million during the first quarter of 2025, with over 30 deals valued at $10 million or more.

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