Palantir Technologies reported robust first-quarter earnings on Monday, posting results that surpassed Wall Street expectations. However, shares of the software and data analytics firm declined in after-hours trading, as investors weighed the company’s lofty valuation and future growth prospects.
Palantir announced first-quarter revenue of $884 million, a 39% increase from the same period last year. The company’s U.S. commercial segment led the way, with revenue surging 71% to $255 million. Government contracts also contributed to the gains, as U.S. government revenue rose 45% to $373 million. Adjusted earnings per share stood at 13 cents, matching analyst forecasts.
Chief Executive Alex Karp attributed the performance to growing demand for Palantir’s artificial intelligence platforms across industries such as healthcare, energy, and automotive. “We are delivering the operating system for the modern enterprise in the era of AI,” Karp said in a statement.
Despite the strong results and an upward revision to its full-year revenue guidance, Palantir’s stock fell as much as 8.75% in extended trading. The company now expects 2025 revenue between $3.89 billion and $3.90 billion, up from its previous forecast of $3.75 billion. U.S. commercial revenue is projected to climb 68% for the year, with second-quarter revenue anticipated between $934 million and $938 million.
Analysts say the sell-off reflects concerns about Palantir’s valuation, which has soared more than 60% year-to-date and nearly 400% over the past year. The stock is trading near its 52-week high, with a price-to-earnings ratio exceeding 650. Some investors may have anticipated even stronger guidance or a larger earnings beat, given the company’s recent momentum.
Palantir closed 139 deals worth at least $1 million in the quarter, including 51 deals over $5 million and 31 over $10 million. The company’s “Rule of 40” metric-a measure of growth and profitability-rose to 83%, up from 57% a year earlier.
While Palantir’s first-quarter results highlight its leadership in AI-powered data analytics, the market reaction underscores the challenges of meeting high investor expectations. The coming quarters will be critical as the company looks to sustain growth and justify its premium valuation.