Palantir shares down 9% despite strong Q1 2025 report and lifted guidance 📉

Palantir (PLTR.US) shares are down over 9% in pre-market trading in the U.S., despite the company delivering a very strong Q1 2025 report and raising its guidance. That wasn’t enough for the markets to find new reasons to buy the stock. Revenue rose 39% year-over-year to $884 million, slightly above the $864 million forecast, while EPS came in at $0.13, matching Wall Street expectations.

• U.S. revenue rose 55% year-over-year, with particularly strong private sector growth of 71% y/y to $255 million (vs. expectations of a 55% increase to $232 million), and a 45% y/y increase in U.S. government contract revenue to $373 million (vs. expected 38% growth to $355 million).
• Palantir also raised its full-year revenue guidance to $3.89–3.902 billion from a previous $3.75–3.76 billion, implying 36% annual growth.
• However, the market noted that the full-year revenue growth rate is expected to decelerate compared to Q1 2025.
• Similarly, U.S. private sector revenue growth is projected to slow from 71% to 68% y/y, reaching $1.17 billion by year-end.
• For Q2 2025, the company expects $936 million in revenue, ahead of the $899 million S&P Global estimate.
• The gross margin stood at 80.25%.
• Palantir’s "Rule of 40" — a key growth stock evaluation metric — improved to 83 points, up from 81 in Q4 2024. The highest private sector demand continues to come from the company’s AI platform.

Palantir Chart (PLTR.US, D1)

Palantir shares quickly recovered from their losses, defending the 200-day exponential moving average (EMA200, red line), and last week retested prior highs at $126 per share. An opening price around $112 per share could indicate a potential double top pattern, which — combined with the stock’s demanding valuation — may pose short-term risk for investors.

Source: xStation5

Valuation Risks

Palantir’s price-to-earnings (P/E) ratios suggest the market views the business as hyper-growth, with significant potential to expand its footprint in the still unsaturated AI market, especially in defense, intelligence, and data analytics. The company posted a record quarterly net profit of $214 million, yet the market is valuing it at $292 billion, pricing in a very ambitious outlook for future profitability and scale.

This scenario significantly elevates volatility risk, as investors tend to price in very optimistic expectations upfront, leaving little room for upside surprises. This is reflected in extremely high valuation metrics — a price-to-sales ratio of 90 and a forward P/E above 200.

Source: XTB Research, Bloomberg Finance L.P.