Palantir (NASDAQ:PLTR) stock plunged 9% after reporting Q1 2025 earnings that met EPS expectations and beat revenue forecasts. Analysts across the board knew that Palantir would beat earnings, since the Wall Street consensus was in line with guidance, and Palantir usually lowballs on its guidance figures.
As such, many expected yet another home run as PLTR stock would surge again once headlines come out about Palantir delivering yet another stunning earnings beat. Unfortunately, that didn’t happen, and the optimism seemed to be baked into the stock already since PLTR stock ended up declining instead post-earnings.
Regardless, Wedbush analyst Dan Ives appeared on CNBC with a stunningly bullish take, calling Palantir "the Messi of AI" and predicting the company would reach a $1 trillion valuation within the next 2-3 years.
Palantir posted solid Q1 results, with revenue rising 39% year-over-year to $884 million, and of course, above analyst estimates of $864 million. Adjusted EPS also came in at $0.13 and matched expectations. US commercial revenue grew 71% to $255 million, while overall US revenue increased 55% to $628 million.
CEO Alex Karp described his company's performance as "unparalleled" and noted they're now at a "$1 billion run rate in US commercial now, which is the gold standard for when a company has really broken through". Palantir also raised its full-year 2025 revenue guidance to between $3.89 billion and $3.902 billion, up from its prior midpoint of $3.75 billion.
Palantir stock initially climbed a little in after-hours trading before reversing course and falling more than 9%. Wall Street obviously wanted dramatic results to justify paying over 650 times earnings for this stock.
As Palantir's stock declined in after-hours trading, Wedbush analyst Dan Ives appeared on CNBC's "Closing Bell Overtime" alongside Jefferies analyst Brent Thill to discuss the earnings. Thill expressed concerns about valuation, but Ives forcefully defended his bullish thesis, and he said, "They are leading when it comes to the AI revolution. If you look at the bears, they hate it at 30, despise it at 50, absolutely say it's expensive at 100, 125".
Ives maintained his "Outperform" rating and predicted that Palantir would reach a $1 trillion market cap within 2-3 years. He also thinks that "retail has been way ahead of institutional" investors on Palantir.
Thrill maintains an "Underperform" rating and said, “There's not a single software stock that we've ever covered that trades at this multiple and sustained it".
The company achieved a "Rule of 40" score of 83 in Q1, and the earnings have definitely been stellar. But should you pay 650 times earnings in the current environment? I don’t think it’d be wise to take on that much downside risk with negative GDP growth and sudden trade policy-related swings. The current valuation already assumes years of continued hypergrowth. Even after the recent pullback, Palantir trades at a premium with no historical precedent in the software industry. I’d stay out unless you’re willing to weather significant pain if the downturn continues.
