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SUMMARY
Parkev Tatevosian, CFA, analyzes Palantir's latest quarterly results and the recent decline in its stock price, noting a shift in valuation that now justifies a buy rating. The discussion covers Palantir's business improvements, AI leadership, and the closing gap between intrinsic value and market price.
MAIN POINTS
- Palantir's stock price dropped nearly 7% following underwhelming quarterly financial results despite ongoing business improvements.
- Palantir achieved its highest-ever quarterly revenue growth rate at 85%, with 79% of revenue now coming from its rapidly growing US business.
- Palantir's AI platform is highlighted as best-in-class for enterprise-scale deployment, outperforming competitors in reliability and scalability.
- Falling costs of large language models are expanding AI use cases for enterprises, illustrating Jevons paradox as described in the analysis.
- Palantir's valuation has normalized after a surge following the 2024 US election, now trading at forward multiples similar to pre-election levels.
- With the market price and intrinsic value converging, Palantir is upgraded to a buy for the first time in a long period as of May 5, 2026.
DETAILED ANALYSIS
Palantir Technologies recently reported quarterly financial results that led to a nearly 7% drop in its stock price, continuing a downward trend of over 27% in the past six months. Despite the decline in share price, the company's business fundamentals have shown marked improvement, creating a rare divergence between market sentiment and operational performance. The company's latest quarter saw an 85% increase in revenue growth, its highest as a public entity, with the US segment now accounting for 79% of total revenue.
This shift is significant as the US business aligns closely with management's strategic vision and is experiencing faster growth than other segments.
Palantir's leadership in enterprise-scale artificial intelligence is emphasized, with its AIP platform positioned as the premier solution for large organizations seeking reliable AI integration. While many AI tools offer impressive demonstrations, few can be effectively scaled for enterprise use. The analysis notes that although large language models are improving and becoming more cost-effective, the true value lies in platforms like Palantir's that can deliver consistent, production-grade results across entire organizations.
The concept of Jevons paradox is invoked to explain how decreasing costs for AI capabilities are enabling a broader range of profitable applications, thereby increasing overall demand for such technologies.
The discussion also addresses Palantir's valuation history, noting that the stock experienced a dramatic surge following the 2024 US presidential election, with forward price-to-earnings ratios peaking at 250 before returning to more reasonable levels around 105. This normalization, combined with ongoing business outperformance, has led to a convergence between the company's intrinsic value—now estimated at $130 per share—and its market price, which recently dropped to $136. With the valuation premium largely eroded, Palantir is now considered fairly valued, prompting an upgrade to a buy rating as of May 5, 2026.
The analysis concludes by recommending further review of the company's fundamentals before making investment decisions.
LINKS
- YouTube channel membership for exclusive perks and early video access.
- Special offer for The Motley Fool Stock Advisor.
- Parkev Tatevosian's book on evaluating publicly traded companies.
- Fiscal.ai investment research tool with a viewer discount.
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