The AI data decision-making company Palantir is set to unveil its first-quarter earnings for 2026 following the market’s closing today, accompanied by a conference call with Wall Street analysts led by CEO Alex Karp. This announcement comes amid a challenging year for Palantir, as it has experienced a significant decline of over 13% in its stock value. Despite a history of strong performance, recent pressures on AI stocks and their valuations have prompted concerns from investors.
Analysts have expressed trepidation leading up to this earnings report. On May 1, HSBC analyst Stephen Bersey downgraded the stock from a buy rating to a hold, slashing his price target from $259 to $205 per share. Bersey cited competition as a primary concern, indicating that rivals like OpenAI and Anthropic are now offering comparable AI coding capabilities, which could threaten Palantir’s unique position in the market.
Looking ahead to the earnings report, consensus estimates suggest that Palantir may report an adjusted earnings per share (EPS) of $0.28 and revenue close to $1.5 billion. These figures would represent astonishing growth, including a 115% year-over-year increase in adjusted EPS and a 75% rise in revenue. Additionally, analysts expect a free cash flow margin expansion of 700 basis points to 54%.
However, analysts believe that exceeding these estimates may not be sufficient for a positive market response due to Palantir’s high valuation. To garner a favorable reaction from investors, Palantir may need to deliver robust guidance for the second quarter and possibly revise its full-year projections upward. The second-quarter consensus estimates predict nearly $1.68 billion in revenue and $950 million in adjusted income from operations.
Management’s current full-year guidance projects revenue between $7.182 billion and $7.198 billion, while consensus predictions from Visible Alpha anticipate $7.273 billion. For U.S. commercial revenue, Palantir aims for growth of at least 115%, amounting to at least $3.144 billion, with Visible Alpha forecasting slightly lower at $3.140 billion.
Moreover, adjusted income from operations is projected to fall between $4.126 billion and $4.142 billion, with Visible Alpha estimates slightly higher at $4.186 billion. The company also anticipates adjusted free cash flow ranging from $3.925 billion to $4.125 billion, while Visible Alpha suggests a midpoint of $4.005 billion.
The response to Palantir’s guidance will be crucial, as even minor deviations from estimates can yield significant stock fluctuations. Given the prevailing market sentiment, failing to adjust guidance could further alienate investors. Of particular concern is the forecast for full-year U.S. commercial revenue, where beating Wall Street estimates could reinstate confidence in the company’s competitive moat.
While the potential for strong earnings exists, there remains a palpable caution surrounding Palantir, especially in light of its lofty valuation. Analysts advise against attempting to trade the stock based on the near-term earnings report, emphasizing the importance of assessing revenue growth and market position moving forward.
