Palantir Stock Crashes After Earnings but It Could Still Soar 300%, According to a Wall Street Analyst

Palantir Technologies (NASDAQ: PLTR) stock had plunged 14% as of 10 a.m. ET on Tuesday, May 6, as investors reacted to its first-quarter financial results. The company reported solid results amid continued demand for its artificial intelligence (AI) platform, but the market clearly had higher expectations.

Nevertheless, technology analyst Dan Ives at Wedbush Securities thinks Palantir stock will surge 300% over the next two or three years. Here's what investors should know.

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Palantir reported stellar financial results in the first quarter

Palantir reported strong first-quarter financial results that exceeded estimates on the top line. Its customer count climbed 39% to 769 and the average existing customer spent 124% more. Revenue increased 39% to $884 million, the seventh consecutive acceleration, driven by strong momentum across the commercial and government segments. Meanwhile, non-GAAP (adjusted) earnings increased 62% to $0.13 per diluted share.

Chief Revenue Officer Ryan Taylor attributed the strong results to "unrelenting demand" for its artificial intelligence platform, AIP. Importantly, the company believes AIP is unique in its ability to operationalize AI, meaning it helps businesses move AI capabilities from prototype to production more effectively than other solutions. After seven quarters of accelerating sales growth, that claim is clearly resonating with buyers.

Importantly, management also raised its full-year guidance, such that revenue is forecast to increase 36% in 2025. The company initially anticipated 30% sales growth this year, but ferocious demand for AIP has already exceeded management's expectations. Nevertheless, the stock fell sharply following the report, indicating that investors expected more from Palantir.

Image source: Getty Images.

Dan Ives says Palantir is headed toward a trillion-dollar market value

What makes Palantir's data analytics platforms unique is an ontology-based architecture. An ontology is an analytical framework that defines the relationship between digital data and real-world objects, letting clients find nuanced patterns in complex information. "Our foundational investments in ontology and infrastructure position us to uniquely deliver on AI demand," Chief Technology Officer Shyam Sankar told analysts.

Certain analysts share that opinion. Forrester Research recently recognized Palantir as a technology leader in artificial intelligence and machine learning platforms, awarding AIP better scores than similar products from Alphabet's Google and Microsoft. "Palantir is quietly becoming one of the largest players in this market," wrote lead analyst Mike Gualtieri.

Dan Ives at Wedbush believes that advantage positions Palantir as a major beneficiary of the AI revolution. "Look, I believe this is going to a trillion-dollar market cap in the next two to three years," he told CNBC after the company's first-quarter financial report. That forecast implies 300% upside from its current market value of $250 billion.

However, most Wall Street analysts are far less optimistic. The consensus estimate says Palantir's adjusted earnings will increase at 26% annually through 2026. That makes the current valuation of 230 times earnings look absurdly expensive. Not surprisingly, most analysts see the stock as overvalued despite its post-earnings decline. The median target price of $98 per share implies 8% downside from its current share price of $107.

Personally, I think Ives is correct in predicting Palantir will eventually be a trillion-dollar company. But I also believe the stock is wildly overvalued at its current price-to-earnings multiple. So, patient investors can buy a small position today, provided they plan to hold the stock for several years and are comfortable with the idea of a sharp decline.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Palantir Technologies. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.