Palantir is heading into its May 5 earnings report with the stock still down 35% from its all-time high, even after becoming one of the most watched AI names on Wall Street. The company has ridden the AI boom to new attention, but the market is asking whether growth can keep outrunning a valuation that remains stretched.
The numbers going into the report are hard to ignore. Palantir said revenue in the fourth quarter soared 70% year over year, with U.S. commercial sales up 137% and U.S. government revenue up 66%. The company also reported a 43% net income margin, a rare sign of profitability for a business still priced like a high-growth story.
That split matters because Palantir’s future is tied to two customer bases that grew up in very different ways. The company started by tailoring its platform for government use and was heavily deployed by defense and intelligence agencies before expanding to other government contracts and eventually the commercial market. Today, revenue is fairly evenly split between commercial and government work, and both are described as central to the company’s next phase.
The product’s profile rose again during the Iran war, when Palantir’s software was used to help with wartime planning decisions that would have been nearly impossible to make without AI technology. That kind of use case has become part of the bull case around the stock, especially as Palantir pushes deeper into agentic AI with its AIP Analyst rollout. But the market has not been willing to reward the company without hesitation; Palantir Technologies shares also fell after Michael Burry said Anthropic is taking share, underscoring how quickly sentiment can turn around AI leaders.
The tension now is valuation. Palantir recently traded at 214 times trailing earnings and 103 times forward earnings, levels that leave little room for disappointment even after the pullback. Wall Street analysts still expect 74% growth in the first quarter and 67% growth in the second, which suggests the next two reports may decide whether the stock’s slide is a pause or the start of a deeper reset.
