Palantir's Growth Story Remains Intact Despite Guidance Miss

Palantir Technologies (PLTR) stock is tumbling Tuesday after the software provider reported strong first-quarter results late Monday, but provided soft guidance for the full year. Still, one analyst says PLTR's growth story remains intact.

In the three months ended March 31, Palantir said its revenue was up 21% year-over-year to $634.3 million. Earnings per share (EPS) improved to 8 cents per share from 5 cents per share in the year-ago period.

The top-line results exceeded analysts' expectations while the bottom line matched forecasts. According to CNBC, Wall Street had expected revenue of $625 million and earnings of 8 cents per share.

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"Our business is now growing at a scale and pace that even our most ardent advocates would have been hard pressed to say was likely, or even possible," Palantir chief executive officer Alex Karp wrote in a May 6 letter to shareholders. "We anticipate that our U.S. commercial business, which accounted for 24% of our revenue last quarter, will remain one of the most significant drivers of our growth in the near term."

As a result of its strong performance in the first quarter, Palantir raised its full-year outlook. The company now expects revenue in the range of $2.677 billion to $2.689 billion, up from its previous outlook of $2.652 billion to $2.668 billion.

However, Wall Street wants more, which likely explains the post-earnings slump for the tech stock. According to CNBC, expectations are for full-year revenue of approximately $2.71 billion.

Where does Palantir stock stand with analysts?

Palantir stock has been a standout on the charts over the past 12 months, nearly tripling in value. Wedbush analyst Daniel Ives sees even more upside for PLTR, as evidenced by his Buy rating and $35 price target which represents implied upside of roughly 62% to current levels.

Ives says he sees "increased momentum" in the stock's growth story thanks to its Artificial Intelligence Platform. "AIP [is] leading the charge in generating significant demand across both commercial and government landscapes while [being] well-positioned to gain a larger share of this $1 trillion opportunity taking place with AI use cases exploding globally," the analyst said in a May 7 report.

Overall, most analysts are on the sidelines when it comes to the AI stock. According to S&P Global Market Intelligence, analysts' average target price for Palantir is $21.13, representing implied downside of about 2% to current levels. Additionally, the consensus recommendation is Hold.

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