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Palantir (NASDAQ:PLTR) just dropped its Q1 numbersand they're smoking. Revenue surged 39% year-over-year to $883.9 million, with U.S. commercial sales skyrocketing 71%. CEO Alex Karp says the company is on fire. Wedbush's Dan Ives went further, calling Palantir a generational tech name with trillion-dollar potential. That would mean 4x upside from its current $250 billion valuation. But here's the twist: despite the beat and bullish commentary, the stock tanked. Why? Valuation. Palantir is trading at a nosebleed 561x earnings. Forward P/E? 148x. By comparison, the S&P 500 hovers around 20x, and even high-growth AI names like Vertiv and Arista sit at a fraction of that.
And Wall Street is tapping the brakes. As of May 6, only 4 of 22 analysts are willing to call Palantir a Buy or Outperform. Thirteen say Hold. And 5 have moved to Underperform or Sell. That's a clear signal: even with blowout growth, many pros are unconvinced this price tag is sustainable.
William Blair's Louie DiPalma didn't sugarcoat ithe says Palantir is trading at 64x its 2026 revenue estimates. CrowdStrike, the second-fastest-growing name in software? Just 18x. Palantir could fall 70% and still be one of the most expensive stocks in the space, DiPalma said.
So what now? You've got a rocket ship with flames coming out the back but no parachute in sight. Analysts are backing away. Investor sentiment is cracking. And the bar's never been higher. Is this the beginning of a trillion-dollar marchor a painful correction waiting to happen? For now, the story's still being written.
This article first appeared on GuruFocus.