Earlier this year, I initiated a position in Palantir (NASDAQ: PLTR) stock. I got in while it was trading below $130 with the aim of holding for the long term.
Now, since my purchase, the growth stock has risen as high as $162. However, this week, it has fallen back to around $135 on the back of the company’s Q1 earnings report. Given this dip, I’ve been buying more shares for my portfolio.
Superb Q1 results
Palantir’s Q1 results were quite incredible. For the quarter:
- Revenue was $1.63bn, up 85% year on year (its highest ever year-on-year growth rate)
- US commercial revenue was $595m, up 133%
- US government revenue was $687m, up 84%
- Adjusted income from operations was $984m, up 152%
These numbers show that the company is growing both its top and bottom lines at a phenomenal pace (which suggests that demand for its AI solutions is very high). Note that the company’s ‘rule of 40’ score (revenue growth plus operating margin) was 145, which is pretty much unheard of.
Strong guidance
I’ll point out that guidance was also very strong. Looking ahead, the company expects revenue of $7.65bn to $7.66bn for 2026 (versus $4.48bn last year) along with adjusted income from operations of between $4.44bn and $4.45bn (versus $2.25bn for 2025).
These numbers were well above analysts’ forecasts. Note that looking further out, CEO Alex Karp said that he expects US commercial revenue to double in 2027 on the back of demand for the company’s Artificial Intelligence Platform (AIP).
While some within the industry are spending their way to a version or likeness of growth, we have built the platforms that are delivering record and accelerating levels of profit.
Palantir CEO Alex Karp
Why I bought the dip
Overall, the results showed that the AI company continues to grow at a spectacular rate and that demand for its services isn’t slowing down. And that’s why I bought more shares for my portfolio.
In my view, this company is a leader in the AI industry. It offers solutions that add real value for customers and already it’s generating billions in revenue on an annual basis.
I also like management’s confidence. It’s worth noting that on the Q1 earnings call, management stressed that there’s no ‘AI slop’ with its products.
I’ll point out that I expect this stock to be volatile. Because it has a very high valuation (the forward-looking price-to-earnings (P/E) ratio is around 100) and high-multiple stocks tend to be turbulent.
Concerns over competition from other AI companies could also lead to share price volatility. Right now, some investors are worried that Anthropic is going to cut into its lunch.
Taking a five-year view, however, I expect this AI stock to perform well (I think it will grow into its valuation). In my view, it’s worth considering as a high-risk, high-reward growth play.
