Palantir’s Stock Decline Amid Scrutiny
Palantir Technologies (PLTR) saw a 13% drop in its stock value on Tuesday afternoon as investors focused on the company’s valuation issues and a downturn in international sales, despite exceeding Wall Street revenue predictions for the first quarter.
International Revenue Challenges
The company’s international commercial segment, which caters to businesses overseas, reported a 5% revenue decline year-over-year for the first quarter, generating $142 million instead of the $160 million anticipated by analysts.
Declining European Market Share
Palantir’s revenue from Europe has decreased significantly, dropping from 16% in Q1 2024 to just 10% in the latest quarter.
CEO’s Insights on European AI Investment
CEO Alex Karp remarked during the post-earnings call that “Europe doesn’t get AI yet,” pointing out ongoing struggles in that market. Since 2023, executives have cited the region’s slower pace in making substantial investments in AI amid declining GDP growth.
Concerns and Market Observations
Analysts, such as Gil Luria, have observed that while there were initial signs of AI investments in Europe, the region is falling behind the U.S. and China, which have committed hundreds of billions to AI infrastructure.
Implications of Political Alignments
Palantir’s affiliation with the Trump administration and its controversial immigration strategy may also hinder its appeal to some European clients. Recent contracts, including a $30 million deal with ICE for immigrant surveillance, have sparked concerns over human rights implications.
Financial Performance Overview
Despite the recent stock decline, Palantir’s first-quarter earnings beat expectations, with $884 million in revenue surpassing the $863 million forecast, partly driven by a 71% increase in U.S. commercial sales. The company also raised its 2025 revenue outlook to between $3.89 billion and $3.9 billion.
The company continues to secure contracts globally, with a 44% rise in foreign government revenue, indicating potential in international markets despite challenges. Analyst Dan Ives remains optimistic about Palantir’s long-term prospects, raising his stock price target to $140.
