Palantir Stock Is Taking a Hit: These Key Figures From the AI Company's Earnings Report Highlight Why I'm Still Not Buying

Shares of artificial intelligence (AI) data and analytics platform specialist Palantir Technologies (NASDAQ: PLTR) slid almost 7% on Tuesday following the company's latest earnings release. The pullback adds to what has already been a rough year for shareholders. The stock is now down more than 20% so far in 2026 and trades roughly a third below its November all-time high.

And I think the slide is justified.

This is a stock I've been skeptical of all year, primarily because of valuation. And while Tuesday's slide makes the stock cheaper, it doesn't make it cheap.

Look past the eye-popping headline numbers, and a more cautious story takes shape beneath the surface.

Image source: Getty Images.

Accelerating revenue, decelerating bookings

Let's start with what went right -- and there's plenty.

Palantir's first-quarter revenue rose 85% year over year to $1.63 billion. That's the company's highest top-line growth rate as a public company, and it marked the 11th straight quarter of accelerating revenue growth. To appreciate just how potent the trend has become, consider the year-over-year growth rates from each of Palantir's last five quarters in consecutive order: 39%, 48%, 63%, 70%, and now 85%.

Further, the company's U.S. business, which now accounts for 79% of total revenue, grew 104% year over year in Q1 -- crossing the triple-digit threshold for the first time. Management also raised full-year 2026 revenue guidance to a midpoint of $7.66 billion, implying 71% growth and a 10-point boost from the prior guide. Finally, Palantir's non-GAAP (adjusted) operating margin came in at an impressive 60%.

So why did the stock slide?

The forward-looking metrics tell a more measured story. Closed total contract value (TCV), which Palantir defines as "the total potential lifetime value of contracts entered into with, or awarded by, our customers at the time of contract execution," came in at $2.41 billion, up 61% year over year. That's a sharp deceleration from the $4.26 billion in TCV closed during the fourth quarter, when growth landed at 138%. And the U.S. commercial slice of TCV showed similar cooling, growing 45% year over year compared to 67% in Q4.

To his credit, chief financial officer David Glazer offered a more flattering framing on the earnings call, noting that "on a dollar-weighted duration basis, TCV bookings grew 135% year-over-year." This suggests that part of what is weighing on TCV is shorter contract durations.

Even so, the unadjusted figures still drive the company's reported backlog -- and that backlog is showing some signs of fatigue. U.S. commercial remaining deal value (RDV) -- the remaining value of contracts at the end of the reporting period -- grew 112% year over year and 12% sequentially to $4.92 billion. That sounds great on its own. But the trend is what catches my eye: from 199% to 145% to 112% in year-over-year growth over the past three quarters, with sequential growth rates compressing from 30% to 21% to 12% over the same span. Further, total companywide RDV grew just 6% sequentially.

CEO Alex Karp didn't directly address the softening. He instead told analysts that the company's "biggest problem currently in the U.S. [...] is that we just cannot meet demand."

That could be true today. But these bookings and backlog metrics suggest the gap between contract momentum and revenue acceleration may not last forever.

Valuation still priced for perfection

Even after the more than 20% pullback this year, the stock looks extraordinarily expensive.

As of this writing, Palantir commands a market capitalization of about $325 billion against trailing-12-month revenue of approximately $5.2 billion. That price-to-sales ratio in the low 60s prices in years more of the kind of performance Palantir just delivered. Even when using management's full-year 2026 revenue outlook, the forward price-to-sales ratio still sits in the low 40s. Meanwhile, the stock's price-to-earnings ratio of around 150 leaves little margin for operational slip-ups or unexpected demand slowdowns.

Even Palantir's own outlook implies a slowdown. The midpoint of full-year 2026 revenue guidance, for example, equates to 71% growth -- down from the first quarter's 85% growth rate.

Still, Karp recently told CNBC he expects the U.S. business to "double again in 2027," so the company is clearly upbeat about its growth potential.

But valuation discipline still matters, even for a company executing this well. With closed TCV growth dropping from 138% to 61% in a single quarter and U.S. commercial RDV growth visibly slowing for three consecutive quarters, the conditions that have powered Palantir's accelerating revenue trend may not persist much longer. When the company's top-line growth rate eventually flips from accelerating to decelerating, the math behind the current valuation could get uncomfortable in a hurry.

With all this said, I'm staying on the sidelines.

Daniel Sparks and his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.