Key Takeaways
Palantir Technologies Inc. (PLTR) fell more than 6% Tuesday despite posting first-quarter revenue that surged 85% and raising its full-year outlook, as comments about the disruptive power of artificial intelligence overshadowed strong results.
"We are seeing the death of legacy software," Shyam Sankar, Palantir’s chief technology officer, said on the company's earnings call. "Every other piece of software must now justify its existence, and so far, they haven’t been able to."
The data-analytics company reported revenue of $1.63 billion, beating consensus estimates, driven by a 133% surge in U.S. commercial revenue. Government revenue also climbed 84% to $687 million, topping estimates. Palantir lifted its full-year revenue guidance to at least $7.65 billion. The strong results were not enough to prevent a selloff in the software sector, with the iShares Expanded Tech-Software Sector ETF (IGV) slipping 0.2 percent.
The remarks from Palantir's leadership suggest its AI Platform (AIP) is positioned not just to compete with, but to entirely replace, existing enterprise software tools. This narrative contributed to declines in other software names, with ServiceNow falling 0.5% and Intuit dropping 2.2%. The market's reaction highlights investor anxiety that the rise of generative AI could destroy demand for traditional software-as-a-service models, even as Palantir itself benefits.
The post-earnings slide comes amid a wider debate over the company's valuation. Palantir trades at a high forward price-to-earnings ratio of 195, leaving little room for execution error. While the immediate market reaction was negative, some analysts remain bullish. 24/7 Wall St. holds a price target of $161.07, citing accelerating U.S. commercial growth and an exceptional Rule of 40 score of 145%. The consensus analyst price target sits higher at $182.99.
The stock has slipped about 17% since the start of 2026, which some investors see as a buying opportunity for a company that continues to deliver strong growth. The decline puts the stock at its lowest level since early March, testing technical support levels. Investors will watch the company's next earnings call for further proof of its AI platform's adoption and its ability to grow into its valuation.
This article is for informational purposes only and does not constitute investment advice.
