Palantir faces its first-quarter earnings report on Monday amid high expectations and strong growth, despite recent underperformance and a demanding valuation.
Analysts expect adjusted earnings per share of 28 cents, more than double the 13 cents from a year ago, on revenue of $1.5 billion, which would be a 75% increase. Free cash flow margins are also expected to rise to about 54% from 47% last year, making Palantir stand out as one of the few tech companies showing strong profits from AI-based software services at scale.
Palantir’s growth is now coming more from its U.S. commercial business than from its government contracts. U.S. government revenue grew by 55% in 2025, but commercial revenue jumped 109% to $1.5 billion in the same period. Analysts expect first-quarter U.S. commercial sales to rise 137% year over year to $605 million. This would put commercial revenue on par with government sales for the first time and show that Palantir’s revenue sources are becoming more diverse.
Even with strong financial results, Palantir shares have dropped about 30% over the past six months. The decline is partly due to concerns that artificial intelligence could make traditional enterprise software less valuable, raising questions about Palantir’s business model resilience. Investors also worry about the potential for slower commercial sales growth and whether advances in AI technology could outpace Palantir’s offerings. During this time, Palantir has also lagged behind the S&P 500.
Palantir’s high valuation makes Monday’s report especially important. The company trades at about 97 times expected future earnings, nearly five times the S&P 500’s forward multiple of 21. This high premium reflects Palantir’s strong growth, profits, and loyal retail investors, but it also means the company must keep outperforming to justify the price. If guidance falls short, commercial growth slows, or competitive AI-driven solutions emerge, the stock’s valuation could come under more pressure, highlighting key risks that investors must monitor.
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