Palantir sales forecast falls short of Wall Street’s hopes

Palantir Technologies Inc. headquarters in Palo Alto, California. Photo by David Paul Morris/Bloomberg files

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Palantir Technologies Inc., whose stock led the S&P 500 in gains this year, dropped in premarket trading on Tuesday after its financial results failed to live up to investors’ loftiest expectations.

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The company described rising demand for artificial intelligence software as a “ravenous whirlwind,” and bumped its 2025 revenue forecast to about US$3.9 billion from about US$3.75 billion, in a statement on Monday. That represents growth of 36 per cent from a year ago.

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Denver-based Palantir, co-founded by billionaire Peter Thiel, is best known for its work with U.S. military and intelligence agencies, while also selling its data analysis tools to governments and commercial customers. The company has recently ridden a wave of AI enthusiasm, sending its stock soaring, and worrying some investors. Recently, shares were trading at more than 200 times estimated earnings, making it the priciest in the Nasdaq 100 Index by this metric.

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Palantir shares had closed at US$123.77 in New York on Monday. The stock had risen about 64 per cent this year.

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The company’s growth was strong in the U.S., but tepid enthusiasm in the rest of the world — which constitutes less than one-third of Palantir’s business — concerned some analysts. “Even with all the good news, it just wasn’t enough to sustain the valuation going forward,” said Bloomberg Intelligence analyst Mandeep Singh. “There wasn’t any clarity around new drivers” of business.

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In his letter to shareholders, chief executive officer Alex Karp said that the company’s growth has outpaced expectations. “This is a level of surging and ferocious growth that would be spectacular for a company a tenth of our size,” he wrote. “At this scale, however, our ascent is, we believe, unparalleled.”

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The company’s revenue for the quarter jumped 39 per cent to US$884 million, exceeding analysts’ average estimate of US$863 million, according to data compile by Bloomberg. Profit, excluding some items, was 13 U.S. cents a share, in line with estimates.

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In the U.S., sales to commercial customers grew 71 per cent in the quarter, to US$255 million. Meanwhile, sales to the U.S. government grew 45 per cent to US$373 million in the period ended March 31, as it notched new deals amid a broader shakeup in government spending. Analysts, on average, estimated US$358 million.

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In a call with analysts on Monday, chief technology officer Shyam Sankar said the U.S. military had doubled the use of the Maven AI system, and Palantir added NATO as a new customer. Like Karp, Sankar has pushed to build up the emerging defence technology industry, and the company has stressed the importance of American manufacturing and industrial capabilities in recent months.

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“The reindustrialization of America is happening in our software,” Karp said.

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In an interview with Bloomberg, Karp said he supports U.S. President Donald Trump’s executive order to reform defence spending procurement, calling the prioritization of commercial products “one of the most important things you can do” to get the best technology at the best price to war fighters.

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Though it sells software to a wide swathe of customers, Palantir doesn’t have a traditional sales force, relying instead on in-person events called bootcamps featuring engineers working with would-be customers using the technology. The company said it closed 139 deals of at least US$1 million, 51 deals of at least US$5 million and 31 deals of at least US$10 million during the first quarter.

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