Palantir has delivered the kind of quarter most software companies would envy, yet its stock is still struggling to win over every corner of Wall Street.
Revenue jumped 85% in the first quarter, adjusted earnings per share surged to $0.33, and the company lifted its full-year outlook after another sharp acceleration in US demand.
Still, Palantir stock (NASDAQ: PLTR) remains under pressure this year as investors debate a simple but uncomfortable question: is this one of the strongest growth stories in software, or has the stock already priced in too much perfection?
Record numbers, falling stock: what’s going on?
Palantir’s first-quarter numbers were hard to dismiss as revenue rose 85% from a year earlier to $1.6 billion, while adjusted earnings per share came in at $0.33, ahead of Wall Street expectations.
US commercial revenue, the part of the business investors watch most closely for private-sector adoption, jumped 133% to $595 million.
The company also reported GAAP net income of $871 million, giving it a profit margin of 53%.
It is the kind of performance that usually fuels a rerating.
The problem is that Palantir was already priced like an outlier as the stock trades at roughly 105 to 110 times forward earnings, far above the broader software sector.
Its price-to-sales ratio is also close to 50 times, compared with low single-digit levels for many software peers.
That leaves little room for disappointment. Even after a record quarter, investors are asking whether Palantir’s growth can stay fast enough to justify the premium.
A broader concern that artificial intelligence may disrupt parts of the software industry has also weighed on sentiment.
Why analysts still see a long runway from here
The bull case is that Palantir is not simply another software company riding the AI wave.
Rosenblatt analyst John McPeake kept a Buy rating on the stock and raised his price target to $225, arguing that Palantir’s Ontology platform gives it a durable competitive moat.
In simple terms, Ontology helps organisations connect messy internal data with operational decisions. That is the layer many companies still struggle to build on their own.
From the June 2 close near $152, Rosenblatt’s target implies roughly 48% upside.
From recent pullback levels closer to $140, the implied upside moves nearer to 60%, which explains why bulls see the selloff as an opportunity rather than a warning.
Loop Capital’s Mark Schappel is also constructive. He reiterated a Buy rating and a $220 target, pointing to AI-driven revenue acceleration and Palantir’s growing role as critical infrastructure for enterprise customers.
The government side of the story matters too, as Palantir’s Maven system is set to become an official Pentagon program of record, locking in a longer-term role across the US military.
Separately, the Department of Defense has reportedly sought $2.3 billion over five years to expand Maven Smart System, making it a structural growth catalyst rather than a one-off contract win.
Palantir’s own guidance supports the bullish argument.
Management lifted full-year revenue guidance to $7.6 billion–$7.7 billion and raised its US commercial outlook to more than $3.2 billion, implying growth of at least 120%.
Is Palantir stock too expensive?
The sceptics are arguing that the stock is expensive enough to make even strong execution look ordinary.
HSBC analyst Stephen Bersey cut his rating to Hold and lowered his price target to $151 from $205, citing rising competition from companies such as OpenAI and Anthropic.
His concern is that Palantir’s once-rare ability to embed engineers and software deep inside customer workflows may become easier for rivals to copy.
That is the core bear case. If competition rises and pricing power softens, Palantir’s premium multiple becomes harder to defend.
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