Palantir’s stock took a nosedive, plunging 13% post-earnings despite crushing revenue estimates at $884 million. Wall Street yawned at the AI darling’s 68% U.S. commercial growth, fixating instead on its sky-high forward P/E ratio above 150 and potential defense spending headwinds. Even a stellar year of 340% gains couldn’t save it from the perfect storm of Fed jitters and tech sector anxiety. The real story behind this tumble goes deeper than mere numbers.
Palantir’s stock plunged 13% after earnings, proving that even crushing Wall Street’s expectations isn’t enough these days.
The AI darling reported Q1 2025 revenue of $884 million, smashing analyst estimates of $862 million, with a particularly strong U.S. showing of $628 million.
But apparently, that wasn’t good enough for investors who’ve gotten spoiled by Palantir’s meteoric rise.
The company has enjoyed a 64.6% year-to-date gain before this sharp decline.
U.S. commercial revenue growth showed remarkable strength with 68% year-over-year guidance for the full year.
Let’s be real – when your stock is up 340% in a year and sporting a PEG ratio of 5.5, good results just don’t cut it anymore.
When stocks soar this high, even smashing expectations can feel like a disappointment to Wall Street’s insatiable appetite.
The market wanted spectacular, earth-shattering numbers.
Instead, they got merely excellent ones.
Talk about tough crowds.
The diluted EPS figures were heavily scrutinized by analysts looking for signs of potential share dilution.
The company’s growth trajectory is showing signs of cooling off, with adjusted EPS growth expected to slow from 62.5% in Q1 to 46.1% in Q2.
Still impressive, but Wall Street has the attention span of a goldfish and always wants more.
The forward P/E ratio above 150 isn’t helping matters either.
Adding to the pressure cooker, CEO Alex Karp’s new stock plan allows for selling up to 10 million shares in the coming months.
Meanwhile, fears about potential defense spending cuts under a possible Trump administration have investors sweating bullets, given Palantir’s hefty government contract exposure.
The technical picture isn’t pretty either.
The stock’s RSI has plummeted from overbought territory above 80 to the mid-40s faster than a skydiver without a parachute.
Though support levels lurk below at $97, $83, and $66, the recent 30% drop from all-time highs has bulls running for cover.
Broader market jitters aren’t helping, with Fed policy uncertainty and tech sector volatility adding to the perfect storm.
Turns out even AI companies can’t defy gravity forever.
The lesson here? Sometimes beating expectations just means you didn’t beat them enough.
Welcome to Wall Street, where good news can be bad news if it’s not great news.
