New York, February 4, 2026, 09:32 EST — Regular session
- Palantir shares slipped 2.8% Wednesday morning following a nearly 7% surge the previous day
- Company forecasted revenue between $7.18 billion and $7.20 billion for 2026; U.S. commercial sales expected to climb by at least 115%
- Analysts raised their targets following the results, yet software stocks continue to face pressure amid concerns over AI disruption
Shares of Palantir Technologies Inc dropped 2.8% to $153.50 in early Wednesday trading, erasing some of the gains from the previous day’s earnings surge.
The move is significant as investors have been offloading software stocks amid concerns that rapidly advancing AI tools might automate services companies typically bill for. Palantir finds itself caught in this tension: it offers AI-powered software but still carries the valuation traits of a high-multiple software firm.
The day before, the stock surged 6.9% following Palantir’s robust quarterly sales report and a notable revenue boost projected for 2026, partly driven by government contracts. Morningstar analysts highlighted “political tailwinds for reindustrialization,” but Jefferies cautioned the company must maintain its performance to support the current valuation. Reuters
Palantir reported fourth-quarter revenue of roughly $1.41 billion, up 70% from the same period last year. Revenue from the U.S. government rose 66% to $570 million, while U.S. commercial revenue surged 137% to $507 million. Adjusted earnings per share came in at $0.25. The company’s “Rule of 40” score—a combined metric of growth and profit margin—hit 127%. SEC
Looking ahead to 2026, the company expects revenue between $7.18 billion and $7.20 billion, with sales to U.S. businesses set to rise by at least 115%, topping $3.14 billion. It also forecast first-quarter revenue of $1.53 billion to $1.54 billion, well above the $1.32 billion analysts predicted, according to LSEG data.
Early Wall Street reactions showed cautious optimism, yet price targets diverged. HSBC bumped Palantir’s rating up to buy from hold and raised its price target to $205 from $197. Deutsche Bank also raised its target sharply to $200 from $160 but stuck with a hold rating. UBS, however, cut its price target to $180 while keeping a neutral view.
Valuation is still a major hurdle, with the stock having surged well beyond most software rivals despite being down roughly 17% year-to-date through Tuesday’s session. “Valuation question marks won’t disappear,” said eToro analyst Zavier Wong, noting that Palantir “remains priced for perfection.” Reuters
Palantir remains under the microscope for its contracts with U.S. Immigration and Customs Enforcement, raising concerns about reputational and governance risks. CEO Alex Karp insists the company integrates safeguards in its surveillance tools to curb government overreach.
The broader market isn’t lending support: software stocks have been declining for several days, with traders quick to offload shares at any suggestion AI agents might undercut traditional software pricing. Salesforce, CrowdStrike, Adobe, and Intuit caught attention as the sector sought some footing.
Traders are now turning to Alphabet, which reports after the bell on Wednesday, followed by Amazon’s earnings Thursday, searching for clues on AI investment and tech risk appetite. Eyes are also on the timing of postponed U.S. labor data, now that the shutdown has wrapped up.
