NEW YORK, May 6, 2026, 11:01 EDT
- Palantir stock dropped once more, even after topping quarterly estimates and hiking its 2026 outlook by a wide margin.
- Valuation remained front and center for investors, with a minor U.S. commercial revenue shortfall drawing attention alongside the headline growth.
- Bank of America kept its bullish stance, though it cautioned the stock faces a tough hurdle ahead.
Palantir Technologies shares dropped 1.4% to $134.04 late Wednesday morning, deepening a selloff that’s followed its recent earnings release. That’s even with the data analytics and AI software firm delivering its strongest revenue growth yet as a public company and upping its full-year forecast. The stock finished Tuesday at $135.91.
Palantir doesn’t have much margin for error here. Investors have pegged it as a top beneficiary of corporate and government AI budgets—yet that’s pushed the stock to a level where investors expect almost flawless execution.
Palantir reported first-quarter revenue of $1.63 billion, up 85% from a year earlier. U.S. revenue shot up even more, more than doubling to $1.28 billion. The company posted adjusted earnings per share of 33 cents—this measure excludes certain costs like stock-based compensation and related payroll taxes. On a GAAP basis, Palantir earned 34 cents per share.
Top-line numbers looked fine, but the revenue breakdown told a different story. U.S. commercial revenue jumped 133% to $595 million—just shy of the $605 million FactSet consensus. That slight miss was enough for traders to take profits after the stock’s extended rally.
Palantir bumped up its 2026 revenue outlook, raising the range to $7.65 billion to $7.66 billion—up from the earlier $7.18 billion to $7.20 billion band. The company is also projecting second-quarter revenue between $1.797 billion and $1.801 billion, topping analyst estimates of $1.68 billion, according to Reuters.
Alex Karp, the chief executive, emphasized Palantir’s U.S. momentum, calling the country “the center, the constant core, of our business” in a shareholder letter quoted by Reuters. “And that business is erupting,” he added. Reuters
Palantir got a boost from its government contracts. U.S. government revenue jumped 84% to $687 million, driven by heightened appetite for defense and intelligence software. Reuters reports the company’s Maven AI system—built for battlefield data analysis and target identification—is on track for designation as a Pentagon program of record, potentially locking in longer-term use for the U.S. military.
Palantir’s cash generation picked up as well. Operating cash flow landed at $899 million, with adjusted free cash flow coming in at $925 million. The company closed the quarter holding $8.0 billion in cash, cash equivalents, and short-term U.S. Treasury securities. Its Rule of 40 score—a key software benchmark combining revenue growth and adjusted operating margin—hit a hefty 145%.
Bank of America stuck with its Buy rating and $255 price target, describing the quarter as a “step-function” print, TheStreet reports. The firm bumped its 2026 sales projection up to $7.85 billion from $7.37 billion and lifted its 2026 EPS view to $1.47, previously $1.30. TheStreet
Even so, the stock faces a unique bar compared to other software peers. Matt Britzman, senior equity analyst at Hargreaves Lansdown, noted Palantir’s results highlighted solid demand and recurring revenue. But he cautioned that “expectations are sky high” and warned investors to brace for greater swings than they’d see in most tech names. Hargreaves Lansdown
There’s a risk AI software prices fall, or the tech becomes too easy to copy, or the field just gets packed. Bank of America, according to TheStreet, flagged concerns around Palantir’s pricing strength, slow public-sector uptake, and intensifying rivalry from OpenAI, Anthropic, and Meta—each one ramping up its AI efforts and threatening to erode Palantir’s lead.
Palantir’s growth keeps both bulls and bears on their toes, but Wednesday made the market’s stance clear. A beat and raise doesn’t cut it anymore—especially when investors have already priced that in.
