(Bloomberg) -- Palantir Technologies Inc. dropped more than 8% in late trading Monday after its results failed to live up to investors’ loftiest expectations for a company whose stock has led the S&P 500 in gains this year.
The company described rising demand for artificial intelligence software as a “ravenous whirlwind,” and bumped its 2025 revenue forecast to about $3.9 billion from about $3.75 billion. That represents growth of 36% from a year ago.
Denver-based Palantir, co-founded by billionaire Peter Thiel, is best known for its work with US military and intelligence agencies, while also selling its data analysis tools to governments and commercial customers. The company has recently ridden a wave of AI enthusiasm, sending its stock soaring — and worrying some investors. Recently, shares were trading at at more than 200 times estimated earnings, making it the priciest in the Nasdaq 100 Index by this metric.
The company’s growth was strong in the US, but tepid enthusiasm in the rest of the world — which constitutes less than one-third of Palantir’s business — concerned some analysts. “Even with all the good news, it just wasn’t enough to sustain the valuation going forward,” said Bloomberg Intelligence analyst Mandeep Singh. “There wasn’t any clarity around new drivers” of business.
In his letter to shareholders, Chief Executive Officer Alex Karp said that the company’s growth has outpaced expectations. “This is a level of surging and ferocious growth that would be spectacular for a company a 10th of our size,” he wrote. “At this scale, however, our ascent is, we believe, unparalleled.”
The company’s revenue for the quarter jumped 39% to $884 million, exceeding analysts’ average estimate of $863 million, according to data compile by Bloomberg. Profit, excluding some items, was 13 cents a share, in line with estimates.
In the US, sales to commercial customers grew 71% in the quarter, to $255 million. Meanwhile, sales to the US government grew 45% to $373 million in the period ended March 31, as it notched new deals amid a broader shakeup in government spending. Analysts, on average, estimated $358 million.
In a call with analysts on Monday, Chief Technology Officer Shyam Sankar said the US military had doubled the use of the Maven AI system, and Palantir added NATO as a new customer. Like Karp, Sankar has pushed to build up the emerging defense technology industry, and the company has stressed the importance of American manufacturing and industrial capabilities in recent months.
“The reindustrialization of America is happening in our software,” Karp said.
In an interview with Bloomberg, Karp said he supports US President Donald Trump’s executive order to reform defense spending procurement, calling the prioritization of commercial products “one of the most important things you can do” to get the best technology at the best price to war fighters.
Though it sells software to a wide swathe of customers, Palantir doesn’t have a traditional sales force — relying instead on in-person events called bootcamps, featuring engineers working with would-be customers using the technology. The company said it closed 139 deals of at least $1 million, 51 deals of at least $5 million and 31 deals of at least $10 million during the first quarter.
(Updates with stock movement starting in the second paragraph.)