Palantir Technologies (NASDAQ: PLTR) stock has faced a rare bearish warning from Wall Street after the artificial intelligence software company delivered stronger-than-expected first-quarter 2026 earnings.
Notably, on May 4, the company reported first-quarter revenue of $1.633 billion, up 85% year-over-year and ahead of analyst expectations. U.S. revenue surged 104% to $1.282 billion, while the commercial segment jumped 133%.
Adjusted earnings per share came in at $0.33, while GAAP earnings per share stood at $0.34. Palantir also posted an adjusted operating margin of 60% and a Rule of 40 score of 145%.
Following the results, the company raised its full-year 2026 revenue guidance to between $7.65 billion and $7.66 billion, representing about 71% annual growth. Palantir also increased its forecast for U.S. commercial revenue growth to at least 120%.
Despite the strong performance, analysts at Jefferies maintained a ‘Sell’ rating on the stock, arguing that valuation concerns outweigh the company’s operational momentum. Analyst Brent Hill said the stock’s current valuation appears stretched even under aggressive growth assumptions.
The firm noted that even if Palantir reaches roughly $12 billion in revenue by 2027, the stock is still trading at around 31 times forward enterprise value-to-revenue, a level analysts consider difficult to justify without exceptionally durable long-term growth.
Bullish analysts on PLTR share price
The bearish stance contrasts with several other Wall Street firms that turned more optimistic following the earnings report.
For instance, Wedbush Securities analyst Dan Ives reiterated an ‘Outperform’ rating and maintained a $230 price target. Wedbush highlighted Palantir’s strong execution across all fiscal 2026 metrics, accelerating AI-driven commercial demand, and improving profitability leverage.
The firm also pointed to raised operating income and free cash flow guidance, along with growing traction across both federal and commercial segments. Wedbush expects U.S. commercial growth to remain near 100% in fiscal 2027 as demand for Palantir’s AI products continues to expand.
Other analysts also raised or maintained bullish targets for the stock following the earnings report. BofA Securities maintained a “Buy” rating with a $255 price target, while Loop Capital reiterated a ‘Buy’ rating and set a $220 target.
However, some firms adopted a more cautious tone, such as CFRA, which lowered its target price from $203 to $192 despite keeping a ‘Buy’ rating, while DA Davidson cut its target from $180 to $165 and maintained a ‘Neutral’ stance.
PLTR stock price drops
Meanwhile, following the earnings report, PLTR stock is showing weakness heading into Tuesday’s trading. As of press time, Palantir shares were trading at $146, up more than 1% in the last session. However, in pre-market trading on Tuesday, the stock was down 2.8% to $141.
Despite solid earnings, the stock is falling amid sell-the-news profit-taking after a recent run-up and ongoing concerns about its high valuation, which continues to price in very optimistic growth expectations.
