Palantir ( PLTR ) stock fell as much as 14% in early trading Tuesday as investors scrutinized the company's valuation and declining sales in its international businesses, even as its first quarter earnings blew past Wall Street's forecasts.
Palantir’s first quarter revenue in its international commercial segment, which sells software to businesses abroad, posted a 10% decline in the first quarter. The segment’s $142 million in revenue was below the $160 million expected by Wall Street analysts.
Palantir CFO David Glazer blamed “continued headwinds in Europe” for the decline but did not elaborate further.
Overall, Palantir's earnings surpassed analyst expectations. Palantir's revenue of $884 million for the March period was ahead of the $863 million expected by Wall Street analysts, driven by a 71% jump in its US commercial business — which sells its AI-fueled data analytics software to companies such as Citi, Hertz, and BP — and a 45% climb in the company’s revenue from US government contracts.
Its earnings per share of $0.13 were in line with estimates, according to Bloomberg data.
The company — whose software does everything from supply chain analysis to surveillance and identifying military targets, to the chagrin of human rights advocates — also raised its 2025 revenue outlook to a range between $3.89 billion and $3.9 billion, up from its prior estimate of $3.75 billion.
"PLTR delivered strong results,” wrote Jefferies analyst Brent Thill, while maintaining his underperform rating on shares.
But he added that “while fundamentals have strengthened in recent quarters, PLTR’s valuation at 56x CY26E rev [56 times its 2026 calendar year revenue] has risen to unprecedented levels,” noting that Palantir’s valuation was “irrational.”
Palantir stock was up over 60% this year ahead of Monday's release. In the past month alone, the stock had gained over 65%.
Read more about Palantir's stock moves and today's market action.
Palantir is still inking contracts with foreign governments, including Europe, where the company has historically had a broad reach . The company’s government revenue from abroad rose 44% to $114 million, ahead of Wall Street analysts’ projects, according to Bloomberg, even as its sales to international businesses fell.
In April, NATO said it had finalized the purchase of Palantir’s software to compile and analyze data for "battlespace awareness and planning," including the identification of military targets.
The deal showed “Europe will likely remain large buyers of U.S. systems with increasing defense budgets,” William Blair analyst Louie DiPalma noted at the time.
Palantir bull Dan Ives remained optimistic on Palantir after its earnings report Monday, raising his price target on the stock to $140 from $120: "We view Palantir as a generational tech name that we see as a trillion market cap over the next three years with PLTR being a core name in the AI Revolution theme over the coming years."
