Why Palantir's strong results failed to halt the share price decline – what's next?

Palantir continues to deliver rapid revenue growth and has raised its 2026 guidance. However, its elevated valuation and the broader sell-off across the software sector have driven Palantir shares down by nearly 30%. The primary forecast for PLTR stock assumes a breakout above 127 USD, followed by a recovery towards 160 USD and 205 USD.

Palantir Technologies Inc. (NASDAQ: PLTR) continues to deliver rapid revenue growth, driven by strong demand for its data analytics software and artificial intelligence solutions. The company's Q1 2026 results showed accelerating growth across both its commercial and government businesses in the US.

However, the strong results failed to support the share price. In June, the stock came under pressure due to its elevated valuation, the broader sell-off across the software sector, and growing concerns about competition in the AI market. Additional pressure came from reports that some of Palantir's government contracts in Europe were being reviewed.

This article examines Palantir Technologies Inc., outlines its revenue sources, reviews its quarterly results, and provides a fundamental analysis of PLTR. It also presents analysts' forecasts for Palantir shares in 2026 and examines the share price dynamics that form the basis for the forecast for Palantir stock in 2026.

About Palantir Technologies Inc.

Palantir Technologies was founded in 2003 by Peter Thiel, Alexander Karp, Joseph Lonsdale, Stephen Cohen, and Nathan Gеttings. The company went public on 30 September 2020 on the New York Stock Exchange under the PLTR ticker symbol.

Palantir specialises in developing software for big data analysis, including Gotham, designed for national security and intelligence agencies; Foundry, for the corporate sector; and Apollo, for deploying software releases. These products are available to both government and private clients, providing software solutions for data management and analysis, and emphasising privacy and security.

Palantir Technologies Inc.’s main financial flows

Palantir’s revenue primarily comes from the sale of licences for its software products and the provision of related services. The main revenue streams are listed below:

• Licence fees: companies and government agencies purchase licences to use Palantir platforms (Gotham, Foundry).
• Subscriptions and services: in addition to initial licences, Palantir offers subscriptions for technical support as well as upgrades and services for program implementation, customisation, and personnel training.
• Professional services: provision of highly qualified services, including data analysis, development of tailored solutions, and assistance with system integration.
• Government contracts: a significant share of revenue is derived from agreements with government agencies, which use the purchased technologies for data analysis in security, intelligence, and other governmental domains.
• Corporate sector: in recent years, the company has been actively expanding its presence in the commercial market, where it offers its analytical solutions to large corporations to optimise their business processes, manage risks, and process statistical data.

As a result, Palantir’s total revenue is generated through a combination of licensed software sales, subscriptions, professional services, and long-term contracts with government and private clients.

Palantir Technologies Inc. Q3 2024 financial results

Palantir Technologies released its Q3 2024 financial results on 4 November 2024. The key report highlights are outlined below:

• Revenue: 726.5 million USD (+30%)
• Net income: 149.3 million USD (+103%)
• Earnings per share: 0.06 USD (+100%)

Revenue by segment and region:

• US: 498.9 million USD (+45%)
• UK: 69.5 million USD (+10%)
• Other countries: 157.0 million USD (+21%)
• Government: 408.3 million USD (+33%)
• Commercial revenue: 317.5 million USD (+27%)
• US government revenue: 319.8 million USD (+39%)
• US commercial Revenue: 179.1 million USD (+34%)

The report indicates that the US government remains Palantir Technologies’ primary source of revenue, contributing nearly half of the company’s total revenue. Palantir forecasted revenue of 767.0–771.0 million USD in Q4 2024, representing a 5-6% increase compared to the previous quarter.

Palantir Technologies Inc. Q4 2024 financial results

Palantir Technologies released its Q4 2024 financial results on 3 February 2025. The key report highlights are as follows:

• Revenue: 827.5 million USD (+36%)
• Net income: 76.9 million USD (–21%)
• Earnings per share: 0.03 USD (–25%)

Revenue by segment:

• Commercial revenue: 372.5 million USD (+31%)
• US government revenue: 343.0 million USD (+45%)
• US commercial revenue: 214.0 million USD (+64%)

Palantir’s CEO, Alexander Karp, noted that the Q4 results continued to impress, emphasising that the company’s early assumptions about the widespread adoption and accessibility of large language models had proven correct and contributed to substantial growth. He also described the results as part of a long-term vision, stating that Palantir is in the early stages of a multi-year revolution for which the company has been preparing for over two decades.

For 2025, Palantir issued an optimistic forecast, expecting revenue in the range of 3.74–3.76 billion USD, which is equivalent to a year-on-year growth of approximately 31%. This guidance significantly exceeded analysts’ consensus estimates, reflecting confidence in the steady demand for the company’s AI platforms and software.

US commercial revenue was projected to reach 1.07 billion USD, representing a 54% increase compared with 2024. In addition, management forecast adjusted operating profit in the range of 1.55–1.57 billion USD and adjusted free cash flow of 1.05–1.70 billion USD. They also forecast to maintain both GAAP operating profit and net income in each quarter of 2025.

For Q1 2025, revenue is projected in the range of 858– 862 million USD, with adjusted operating profit between 354 and 358 million USD, setting new targets for the year ahead.

Despite Palantir’s positive outlook, recent reports of potential cuts to the US defence budget have raised concerns among investors, as over 40% of Palantir’s Q4 revenue came from US government contracts.

Palantir Technologies Inc. Q1 2025 financial results

On 5 May 2025, Palantir Technologies published its Q1 2025 financial results for the quarter ended 31 March. The key figures are as follows:

• Revenue: 883.9 million USD (+39%)
• Net income: 214.0 million USD (+24%)
• Earnings per share (non-GAAP): 0.13 USD (+62%)

Revenue by segment:

• Commercial revenue: 396.8 million USD (+33%)
• Government revenue: 486.9 million USD (+45%)
• US government revenue: 373.0 million USD (+45%)
• US commercial revenue: 255.0 million USD (+71%)

The Q1 2025 earnings report reflected Palantir’s continued growth and strengthened position in the AI solutions market. Revenue rose 39% year-on-year and was in line with analysts’ consensus forecasts, underlining the company’s strong business momentum. A major driver of growth was the US commercial segment, where revenue increased by 71%.

The quarterly data pointed to progress in diversifying revenue streams. Palantir continues to reduce its reliance on government contracts by increasing the share of commercial clients. The client base is also expanding, with the number of customers up 39% year-on-year and 8% quarter-on-quarter.

During the reporting period, Palantir closed 139 deals, each worth at least 1 million USD, including 51 above 5 million USD, and 31 exceeding 10 million USD. These figures underscore the rising demand for Palantir’s products among large corporate clients.

Profitability indicators were also impressive. Operating income totalled 176 million USD, with a 20% margin, and free cash flow amounted to 370 million USD. The Rule of 40, which is the sum of revenue growth and operating margin, stood at 83%, demonstrating a healthy balance between growth and efficiency.

Palantir maintains a confident outlook. Its full-year 2025 revenue forecast has been raised to a range of 3.89-3.90 billion USD, reflecting expectations of continued strong performance driven by its AIP platform and expanding partnerships in the commercial sector. The Q2 2025 forecast includes revenue in the range of 934–938 million USD and operating income of 401–405 million USD.

Despite the positive earnings report, Palantir’s shares fell by 11% following publication due to concerns about high valuation multiples – specifically, a P/E ratio of 536 compared with the software industry average of 42. However, PLTR’s share price rebounded the following day, suggesting that investors remain willing to accept risk in anticipation of outstanding results from Palantir Technologies.

Palantir Technologies Inc. Q2 2025 financial results

On 4 August 2025, Palantir Technologies published its Q2 2025 financial results for the quarter ended 30 June. Key highlights are as follows:

• Revenue: 1.00 billion USD (+48%)
• Net income: 326.72 million USD (+33%)
• Earnings per share (non-GAAP): 0.16 USD (+100%)

Revenue by segment:

• Commercial revenue: 450.7 million USD (+47%)
• Government revenue: 552.9 million USD (+49%)
• US government revenue: 426.1 million USD (+53%)
• US commercial revenue: 306.5 million USD (+93%)

Palantir demonstrated strong growth in Q2 2025. Revenue reached 1.00 billion USD, up 48% year-on-year and 14% quarter-on-quarter. Growth was driven primarily by two segments: the Government segment contributed 553 million USD (+49% y/y), while the Commercial business generated 451 million USD (+47% y/y). Geographically, the US remained the primary growth driver, generating revenue of 733 million USD (+68% y/y and +17% q/q). Outside the US, revenue totalled 271 million USD (+12% y/y).

Profitability improved in Q2. The gross margin stood at approximately 80.8%, representing the portion of revenue retained after direct product servicing costs. GAAP operating margin reached 27%, while net margin was 32.6%, reflecting substantial net profit relative to revenue. On a non-GAAP basis, which excludes certain non-operational items, the operating margin was 46%. Margin expansion was supported by operational leverage, with expenses growing more slowly than revenue.

Earnings per share were 0.13 USD on a GAAP basis and 0.16 USD on a non-GAAP basis. The difference is attributable to stock-based compensation and related employer taxes.

Management raised guidance for Q3 2025, expecting revenue of 1.083–1.087 billion USD and adjusted operating income of 493–497 million USD. For the full year 2025, the company forecasts revenue of 4.142–4.150 billion USD (around +45% y/y), adjusted operating income of 1.912–1.920 billion USD, and adjusted free cash flow of 1.8–2.0 billion USD. The company also highlighted the acceleration of the US commercial segment, which is projected to exceed 1.302 billion USD over the year.

Palantir Technologies Inc. Q3 2025 financial results

On 3 November 2025, Palantir Technologies released its results for Q3 of the 2025 financial year, ended on 30 September. The key figures are as follows:

• Revenue: 1.18 billion USD (+63%)
• Net income (non-GAAP): 528.71 million USD (+119%)
• Earnings per share (non-GAAP): 0.21 USD (+110%)

Revenue by segment:

• Commercial Revenue: 548.42 million USD (+73%)
• Government Revenue: 632.68 million USD (+55%)
• US Government Revenue: 485.90 million USD (+52%)
• US Commercial Revenue: 396.70 million USD (+121%)

Palantir delivered exceptionally strong Q3 2025 results, significantly exceeding market expectations. Revenue grew by 63% year-on-year, around 8% above consensus, while adjusted earnings per share (non-GAAP EPS) reached 0.21 USD versus forecasts of about 0.17 USD.

On a non-GAAP basis, the company now operates like a mature, high-margin software business. Adjusted operating profit came in at 601 million USD with a margin of 51%, adjusted net profit at 529 million USD, and adjusted free cash flow at 540 million USD (a margin of 46%) – meaning that more than half of revenue is converted into cash.

Growth is being driven primarily by expanding customer relationships. Net dollar retention reached 134%, indicating that existing customers increased their spending on Palantir by approximately 34% year-on-year. At the same time, the company's total contract value grew by 151% to 2.8 billion USD.

The business mix has also shifted in favour of the commercial segment. Commercial revenue rose 73% year-on-year, while US Commercial revenue jumped 121% to 397 million USD. Government revenue increased 55% year-on-year. The US market now accounts for around 75% of total revenue, with the number of large deals continuing to grow – 204 contracts worth over 1 million USD during the quarter, including 53 exceeding 10 million USD.

Management raised its full-year 2025 guidance: expected revenue is now 4.396–4.400 billion USD (+53% y/y), adjusted operating profit is projected at 2.151–2.155 billion USD, and adjusted free cash flow at 1.9–2.1 billion USD. For Q4 2025, the company expected revenue of approximately 1.33 billion USD and further margin expansion.

Palantir Technologies Inc. Q1 2026 financial results

On 4 May 2026, Palantir Technologies released its Q1 2026 financial results for the quarter ended 31 March. Below are the key figures:

• Revenue: 1.63 billion USD (+85%)
• Net income (non-GAAP): 856.45 million USD (+156%)
• Earnings per share (non-GAAP): 0.33 USD (+154%)

Revenue by segment:

• Commercial revenue: 774.17 million USD (+95%)
• Government revenue: 858.41 million USD (+76%)
• US Government revenue: 686.79 million USD (+84%)
• US Commercial revenue: 594.79 million USD (+133%)

The primary growth driver in Q1 2026 was the continued acceleration of Palantir's US business. US revenue increased by 104% to 1.28 billion USD, accounting for almost 79% of the company's total quarterly revenue.

Revenue from the US commercial business increased by 133% to 595 million USD. The number of US commercial customers rose by 42% to 615, while the remaining deal value in this segment increased by 112% to 4.92 billion USD. These figures indicate that customers are expanding their use of Palantir's platforms following the initial deployment.

The US government business also delivered strong growth. Revenue increased by 84% to 687 million USD, supported by sustained demand from defence and other government agencies. Total government revenue reached 858 million USD, up 76%.

During the quarter, Palantir signed 206 deals worth at least 1 million USD. Of these, 72 contracts exceeded 5 million USD, and 47 exceeded 10 million USD. The total contract value increased by 61% to 2.41 billion USD.

Following the strong quarter, management raised its full-year 2026 guidance. The company now expects:

• Revenue in the range of 7.650–7.662 billion USD
• Annual revenue growth of approximately 71%
• US commercial revenue of more than 3.224 billion USD, representing a growth of at least 120%
• Adjusted operating income in the range of 4.440–4.452 billion USD
• Adjusted free cash flow of 4.2–4.4 billion USD

The upgraded guidance reflects management’s expectation that strong demand for Palantir's platforms will continue. Particularly robust growth is forecast for the US commercial segment, which is gradually becoming one of the company's key growth drivers.

Analysis of key valuation multiples for Palantir Technologies Inc.

Below are the key valuation multiples for Palantir Technologies Inc. based on the Q1 2026 financial year results, calculated at a share price of 112 USD.

Calculation basis:

• TTM revenue: 5.224 billion USD
• TTM non-GAAP net income: 2.438 billion USD
• TTM adjusted EBIT: 2.847 billion USD
• TTM adjusted EBITDA: 2.873 billion USD
• TTM adjusted free cash flow: 2.825 billion USD
• Cash and cash equivalents: 2.292 billion USD
• Marketable securities: 5.735 billion USD
• Total liquidity: 8.026 billion USD
• Total debt: 0 USD – the company has no debt
• Net cash: 8.026 billion USD
• Palantir shareholders' equity: 8.450 billion USD
• Enterprise value (EV): 270.974 billion USD
• TTM non-GAAP EPS: 1.46 USD

Valuation multiples analysis for PLTR – conclusion

Palantir combines rapid growth, high profitability, strong free cash flow generation, and a debt-free balance sheet. However, its current market capitalisation already reflects expectations of continued strong growth, and even a substantial increase in earnings during 2026 would not bring its valuation multiples down to moderate levels.

Even after PLTR shares fell from 200 USD to 115 USD, Palantir still appears overvalued based on its key valuation multiples.

Further gains in the share price will require the company to continue exceeding expectations, maintain high operating margins, and rapidly expand both its commercial and government businesses. The key weakness in the current valuation is the very limited margin of safety should growth begin to slow.

What triggered the decline in Palantir shares in June

Despite the strong quarterly results and upgraded guidance, Palantir shares came under heavy pressure in June 2026. Over the course of the month, the stock lost around 30% of its value, falling to its lowest level of the year. The decline marked the company's worst monthly share price performance since February 2021.

The primary reason was Palantir's elevated valuation. The market had already priced in continued very strong growth, so any doubts about its sustainability prompted investors to take profits.

Additional pressure came from a rotation of capital away from software companies and into memory and semiconductor manufacturers, which are benefiting more directly from rising investment in data centres. Investors were also concerned about increasing competition from OpenAI, Anthropic, and other developers of AI solutions.

Negative sentiment was further reinforced by reports of a review of Palantir's contract with the UK's NHS and by plans for France's DGSI to switch to solutions provided by the domestic company ChapsVision. These developments increase the risks associated with Palantir's expansion in the European market.

Expert forecasts for Palantir Technologies Inc.’s stock

• Barchart: 19 out of 29 analysts assigned a Strong Buy rating, 8 rated the shares as Hold, 1 recommended Sell, and 1 assigned a Strong Sell rating. The upper price target is 255 USD, and the lower bound is 90 USD.
• MarketBeat: 19 out of 34 analysts assigned a Buy rating, 12 recommended Hold, and 3 recommended Sell. The upper price target is 255 USD, and the lower bound is 90 USD.
• TipRanks: 13 out of 21 analysts assigned a Buy rating, 6 recommended Hold, and 2 recommended Sell. The upper price target is 255 USD, and the lower bound is 70 USD.
• Stock Analysis: 18 out of 32 analysts assigned a Strong Buy rating, 1 assigned a Buy rating, 11 rated the shares as Hold, 1 recommended Sell, and 1 assigned a Strong Sell rating. The upper price target is 255 USD, and the lower bound is 70 USD.

Palantir Technologies Inc. stock price forecast for 2026

On the weekly chart, Palantir shares continue to trade above the 200-period moving average, indicating that the broader uptrend remains intact. The Stochastic indicator is in oversold territory, signalling that the current correction may be nearing completion and that the share price could resume its upward movement. Based on the current price structure of Palantir Technologies shares, the potential scenarios for 2026 are as follows.

The primary forecast for Palantir Technologies shares assumes a breakout above resistance at 127 USD, followed by a rise in PLTR to 160 USD. A sustained move above 160 USD would open the way towards the next target at 205 USD.

The alternative forecast for Palantir Technologies stock assumes a continuation of the correction, with the share price declining towards support at 95 USD. A rebound from that level would signal the end of the decline and the potential resumption of the uptrend. The primary upside target would be 160 USD.

Risks of investing in Palantir Technologies Inc. stock

Investing in Palantir’s stock in 2026 involves certain risks that may impact the company’s earnings. Below are potential risks and factors that could negatively affect its revenue:

• Elevated valuation: despite the June sell-off, Palantir shares continue to trade at very high valuation multiples. If the company fails to deliver the growth needed to justify these valuations, investor sentiment could deteriorate, resulting in a sharp decline in the share price. Such a correction could occur if revenue growth falls short of the expected 25–30% per year.
• Reliance on government contracts: a sizeable portion of Palantir’s revenue comes from government clients, particularly US defence and intelligence agencies. Reductions in federal budgets, policy shifts under a new administration, or the non-renewal of key contracts could substantially impact revenue. Political instability or cuts in defence spending would heighten this risk.
• Commercial sector challenges: although Palantir’s Commercial revenue is growing, it still constitutes a smaller share of total revenue. The company struggles to scale due to elevated costs, making it less attractive to small and medium-sized enterprises. If the Commercial sector growth slows or fails to offset potential declines in its government revenue, overall revenue may suffer.
• Rising competition: Palantir faces competition from tech giants like Microsoft (NASDAQ: MSFT), which may integrate AI and analytics into broader offerings, as well as from specialised companies. If competitors offer cheaper or more affordable alternative solutions, Palantir risks losing its market share (especially in the commercial sector), which would negatively impact the company’s financial position.
• Regulatory and AI risks: tighter regulation of AI and data analytics, especially in the US and globally, could limit Palantir’s capabilities or increase compliance costs. Concerns over privacy or misuse of its tools (for example, in surveillance) could damage the company’s reputation, thereby deterring clients and reducing revenue.
• Share capital dilution due to stock compensation: Palantir actively uses company shares for compensation, reducing their value for shareholders. If this practice continues without corresponding revenue growth, it could undermine investor confidence and put pressure on the stock price, raising doubts about the stability of future revenue.
• Stock sales by insiders: in 2024, the company’s insiders, including CEO Alex Karp and co-founder Peter Thiel, actively sold significant portions of their personal holdings, with Thiel divesting a third of his stake during this period. In February 2025, it was announced that Karp had applied to sell an additional 1.00 billion worth of shares. Such insider activity may negatively impact the market price of the shares and investor sentiment.

All these factors reduce confidence in Palantir’s ability to maintain its projected growth trajectory and revenue streams in 2025, making investment in its stock highly risky.

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