Palantir Stock Is Down 38% While Revenue Grew 85%. Its CEO Says the Bears Have It Backward

Key Stats for Palantir Stock

• Current Price: $127.99
• Target Price (Mid): ~$825
• Street Target: ~$184
• Potential Total Return: ~545%
• Annualized IRR: ~50% / year
• Earnings Reaction: -6.93% (May 4, 2026)
• Max Drawdown: -38.22% (June 12, 2026)

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What Happened?

Palantir Technologies (PLTR) just posted the fastest growth in its history, and the stock has fallen apart anyway. Shares closed at $127.99 on June 12, leaving them 38% below the $207.52 high from last November. That drawdown of 38.22% is the deepest the stock has sat underwater in a year.

The disconnect is the story. Companies do not usually grow 85% and lose a third of their value at once. Bears say cheaper, smarter AI models will commoditize enterprise software and strip Palantir’s premium price. CEO Alex Karp says that fear is exactly why his customers keep coming back. The gap between $127.99 and the company’s own results is where the answer lives.

The Fear Driving the Selloff

The bear case is not lazy. Even after the fall, Palantir trades at extreme multiples: an NTM P/E near 81x and an NTM EV/EBITDA around 58x, against a software peer median near 12x. That leaves no room for error.

The error now has a name. On June 9, Reuters reported that the UK is reviewing its £330 million NHS data contract and weighing a break clause in early 2027. London’s mayor had already blocked a separate £50 million police deal a month earlier. Suddenly, the international government business, about $172 million last quarter, looks like a political target. The stock dropped on the news because the most expensive software name falls hardest when sentiment turns.

Why Karp Says the Bears Have It Backward

Here is the turn. The thing bears fear, AI getting cheaper, is the thing management says fuels the business.

On June 10, Karp told CNBC that enterprises are frustrated with the frontier labs and accused them of “tokenmaxxing,” optimizing for how many AI tokens a customer burns rather than the result. That restates the Q1 call. CTO Shyam Sankar framed it as Jevons paradox, the rule that when something gets cheaper, you use far more of it. “Tokens are the new coal, AIP is the train,” he said. Cheaper models mean more tasks handed to AI, and more tasks without control means more errors.

That is the pitch for AIP, Palantir’s platform for putting AI models to work inside a company’s live operations. Sankar called it the “no slop zone,” a system that governs and audits every action an AI agent takes. “More tokens means more slop,” he said, and the more cheap AI a company runs, the more it needs something to keep that AI from causing damage. If he is right, falling model costs grow Palantir’s market instead of shrinking it.

The Numbers Behind the Argument

The thesis would be hollow without the quarter to back it. In Q1 2026, revenue grew 85% to $1.633 billion, Palantir’s highest rate as a public company. US revenue crossed 100% growth for the first time, up 104% to $1.282 billion. US commercial revenue, the segment that proves the AIP story, grew 133% to $595 million. Net dollar retention hit 150%, meaning existing customers spent half again as much as a year earlier.

Profit moved with it. GAAP net income was $871 million, a 53% margin, and adjusted free cash flow reached $925 million at a 57% margin. As Karp put it, “Our free cash flow this quarter is larger than our revenue a year ago in the same quarter.” Management raised full-year guidance to about $7.66 billion, a 71% growth rate and its largest raise ever.

The premium is the whole fight. At 58x forward EBITDA, Palantir towers over Microsoft near 13x, ServiceNow around 16x, and Oracle near 13x. That gap only holds if Palantir grows several times faster than that group, which it does today at 85% versus their low-to-mid teens. Bears bet the multiple closes before the growth justifies it. Bulls bet 133% US commercial growth is the start of a category. Wall Street sits in between: as of June 12, analysts split 18 Buys, 1 Outperform, 10 Holds, 1 Underperform, and 1 Sell, with a mean target near $184.

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TIKR Advanced Model Analysis

• Current Price: $127.99
• Target Price (Mid): ~$825
• Potential Total Return: ~545%
• Annualized IRR: ~50% / year

See analysts’ growth forecasts and price targets for Palantir stock (It’s free!) >>>

The around $825 mid-case target by year-end 2030 runs on two revenue engines: US commercial AIP adoption, up 133% last quarter, and US government expansion, up 84%. The margin driver is operating leverage, turning new revenue into profit without spending proportionally more, visible in that 57% cash flow margin. The model assumes roughly a 50% revenue CAGR over the window.

The upside: if AIP becomes the default control layer for enterprise AI, the around 545% return reflects a company early in a category it built. The downside: the target bakes in high-50s net margins and durable hyper-growth, so any deceleration, a lost contract like the NHS deal, or compression toward peer multiples would cut it sharply.

Conclusion

The next test is Q2 earnings, expected in early August. Watch US commercial revenue against the roughly $1.80 billion total guidance. Karp says the company’s biggest problem is that it “just cannot meet demand,” so a print holding triple-digit US commercial growth confirms the thesis is real. A slip below 100% there, paired with movement toward the NHS break clause, hands bears their first hard evidence. The number lands in August, and it settles which side of this 38% gap was right.

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Should You Invest in Palantir?

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!