Palantir, the U.S. data analytics company, posted its steepest revenue growth since going public, driven by expanded contracts with the U.S. Department of Defense (Department of War) and surging artificial intelligence (AI) demand from corporate clients. Although the company raised its full-year outlook with confidence, caution is emerging amid concerns over a software slowdown tied to AI adoption and debates over its high valuation.
Palantir said Monday that first-quarter revenue rose 85% year-on-year to $1.633 billion (about 2.4 trillion won). The figure beat the $1.54 billion (about 2.27 trillion won) consensus estimate compiled by LSEG and marks the fastest growth rate since its 2020 listing. Net profit more than quadrupled from a year earlier to $871 million (about 1.28 trillion won), while earnings per share (EPS) came in at $0.33, surpassing the market forecast of $0.28.
Palantir has supported data-driven decision-making for government agencies and corporations through software that integrates, manages and analyzes vast amounts of data. The company has emerged as a defense industry powerhouse after the U.S. Department of Defense adopted its "Maven AI System," which analyzes battlefield data to assist military operations.
The strong results are largely attributed to contracts won from the U.S. government. U.S. revenue rose 104% year-on-year to $1.282 billion, with government revenue accounting for $687 million as the core pillar. Reflecting the encouraging performance, the company raised its annual revenue guidance to as much as $7.66 billion, up from the previous maximum of $7.2 billion.
Still, the market's response has been cautious. Palantir shares closed up 1.36% in regular trading but fell more than 2% in after-hours trading.
One concern is the heavy concentration of revenue in U.S. government contracts. Although U.S. commercial revenue more than doubled from a year earlier, it was seen as falling short of expectations. In a recent report, Bloomberg Intelligence noted that "Palantir's government segment is benefiting from expanded defense spending amid military tensions with Iran," but added that "the key to future growth lies in securing new corporate clients and expanding into overseas markets."
The so-called "software obsolescence" argument recently raised on Wall Street is another headwind. As AI agents become more advanced, concerns are spreading that they could replace existing software. HSBC also downgraded Palantir's investment rating to "hold" from "buy."
Its high valuation is another burden. According to Bloomberg, Palantir's 12-month forward price-to-earnings (PER) ratio stands at about 99 times, higher than competing software companies. This reflects its government contracts, meaning the stock could drop sharply if contracts are delayed or disrupted.
