Palantir Grew Revenue 85% and Raised Full-Year Guidance by 10 Points — So Why Is PLTR Down 26% YTD?

The Palantir stock first quarter of 2026 numbers were a great, not just good, quarter from Palantir on almost all fronts. The business reported $1.633 billion revenue, an 85% year-over-year increase that marked Palantir’s fastest growth since it went public in 2020. Palantir reported $1.282 billion in US revenues, a 104% rise year-over-year. US commercial revenues were a $595 million, and that was a 133% increase from last year. US government revenues were a $687 million, and that was an 84% jump from a year ago. The GAAP net income reported was a $871 million, that comes out to a $0.34 a share. The Rule of 40 metric that investors look to in the sector to compare the growth rate and the profit margin came in at a 145%. That score is not one a business of Palantir’s size has ever managed at a public listing in the software industry.

Palantir raised its full-year 2026 guidance on a mid-point basis to $7.656 billion in revenue, which is 71% year-over-year growth, or a full 10 percentage points above guidance issued previously in the company’s last earnings call. It lifted its growth expectation for US commercial revenue to 120% year-over-year. 

Palantir CEO Alex Karp suggested this was a strong indication the company will dominate an era he called “commodity cognition,” in which rapid improvement in the performance of AI models is driving enterprise demand for Palantir AIP (Artificial Intelligence Platform) to accelerate above expectations. The company has kept adding AIP client conversion, from AIP boot camps in large enterprises, into multi-year contracts with ontology-driven revenue from them. The pipeline has expanded into new, heavily-regulated industries, including the defense sector, healthcare, and financial services.

The Palantir stock is selling off its gains from earnings day on the stock market, and it has not yet recovered to those levels. The reason for that is simply that at a $133.71 share price, it is at a 97x forward earnings multiple, a price-to-sales that is putting Palantir among the most expensive software stocks the market can buy. When a stock is selling at a 97x forward multiple, a stellar quarter, like that Palantir reported, is not all that reassuring if there’s not a multiple expansion catalyst there. The 85% revenue growth is impressive enough on its own, but the market is wondering if that will get to 90% in the next year, and 95% on the second year. Can US commercial revenue, which is Palantir’s fastest growing line right now, maintain 133% growth as the business scale becomes more entrenched?

A portion of revenue still comes from US government customers with a $687 million contract, and government revenue contracts do not have the same renewability characteristics as Palantir is seeing from its commercial AIP deals with different margin profiles. That isn’t a reason why the company has a bad business model; it’s more that at a 97x forward earnings multiple, there is limited wiggle room left for anything other than constant, steady-state improvement above current levels, let alone a slowdown. The August first quarter earnings report is going to show which way the market decides to take this one in terms of how it will react to the Palantir earnings report. Another acceleration of the company’s 133% US commercial revenue growth and higher guidance would be a squeeze on the valuation trade. But, just a modest slowdown could mean another leg down for the Palantir share.

The Palantir stock is sitting at a $133.71 price in the 2H NASDAQ chart, and that is bouncing from the steep black price line going down from the March peak that was around $164 with a green bullish hammer candle at a $130 to $134 price level on the blue dynamic moving average support line. We are forming a falling wedge pattern of compression right now, from the $122.76 Palantir stock base price to this price and we are holding onto the clean higher low pattern. 

 Palantir (NASDAQ: PLTR) Price Chart - Source: Tradingview

The RSI is trading in a 42 to 47 range and we are in positive divergence with the price dip, so prices are going down but not the momentum and that suggests we should see a turnaround soon. The price is going to test the $136.67 to $140.07 area as first level of resistance, followed by the $145.20 area as the second level. $129.78 to $125.62 are the next two price points of support.

Trade Plan: Go long Palantir shares above $134.50 if the descending price line is broken. Get out at the $140.07 price target and move a second target up to the $145.20 price range. Close out the position if the stock closes below the $129.70 area on a daily basis and the higher-low structure breaks.

The PLTR stock is down 26% YTD despite revenue growing 85% in Q1 2026 and the Rule of 40 score hitting 145% because the price is at a 97x forward earnings multiple. Even at that multiple, results that good will not always move the stock because PLTR needs to prove growth rates will hold or increase as revenue grows. The selloff after the May 4 earnings beat reflects valuation compression because Palantir was trading at 97 times forward earnings. The US commercial growth of 133% is what will drive the re-rate.

The selloff after the May 4 earnings beat reflects valuation compression after reporting Q1 2026 revenue of $1.633 billion which was 85% growth, the company's fastest rate since its IPO in 2020. US revenue was 104% growth at $1.282 billion, with US commercial growing 133% at $595 million. US government was 84% growth at $687 million. GAAP net income was $871 million or $0.34 per share. Palantir raised full-year 2026 revenue guidance to $7.656 billion, a 10-point increase and its largest raise ever. The Palantir Rule of 40 score was 145%.

PLTR is setting up in a falling wedge with a bullish hammer at a descending trendline and a bullish RSI divergence at 42 to 47. Buying over $134.50 is targeting $140 then $145.20 with a stop loss under $129.70. The 85% revenue growth is strong and 133% for US commercial is even better. PLTR raised guidance 10 points, its biggest raise ever. The downside is the 97x forward earnings which means it has to grow at an even faster pace with US commercial and not slip in Q2 to sustain this multiple. It will be August earnings that will settle that.

Palantir Q1 2026 earnings results were 85% revenue growth and 133% for US commercial, both very strong numbers. Its Rule of 40 was 145% and it raised guidance 10 points for its largest raise ever. The stock is down 26% YTD because of valuation but not fundamentals. With a falling wedge at a bullish trendline and bullish RSI divergence at 47, the stock is building a good pattern for a bounce. Buying over $134.50 has targets at $140 then $145. This trades over August earnings. If US commercial is 133% or stronger, Palantir will rise. If it is weaker, $125 is in play. Look at US commercial for the answer.