Palantir Rakes in USDA AI Deal and Declares SaaS Dead, But Insiders Cash Out $120M

Palantir wins $13.3M USDA contract and declares SaaS dead, but $120M insider sales and 154x P/E keep shares down 17% YTD.

Palantir is sending two very different messages to the market. The software company has just landed a new artificial intelligence contract with the U.S. Department of Agriculture, and at the same time it is publicly trashing the standard software-as-a-service model as obsolete. Investors, however, are more focused on the stock’s punishing valuation and a $120 million insider sale that took place on May 20.

The USDA award starts at $3.9 million and can grow to $13.3 million through September 2027. Palantir will build a platform that fuses building data, badge scans and seating charts to give the agency real-time visibility into office occupancy and space utilization. The deal plugs Palantir deeper into government operations at a time when federal agencies are leaning on data to manage hybrid work policies.

That contract fits neatly into a broader narrative CEO Alex Karp is pushing: Palantir’s AIP platform is becoming the operating system for decision-making in both the public and private sectors. To underline the point, deployment strategist Daniel Lutkus declared the classic SaaS model “dead,” arguing that off-the-shelf software cannot handle the complexity of modern data-rich enterprises. The company is instead pitching bespoke operating systems built around each client’s data flows — a bet that drove commercial revenue up 133% in the first quarter.

Insider sales, valuation keep the lid on shares

Despite the bullish product story, the stock continues to trade under a cloud. Shares stood at €118.36 on Tuesday, down 0.55% on the day and 17.29% lower year to date. The current price sits 34.19% below the recent high of €179.86.

The selling from the C-suite is a fresh source of angst. On May 20, the three top executives unloaded shares worth more than $120 million. Karp alone sold about $54 million worth of stock, President Stephen Cohen and technology chief Shyam Sankar also cashed in large blocks. The sales were executed under pre-arranged trading plans designed to cover tax obligations from stock awards — standard practice in Silicon Valley — and Karp still holds over 59 million shares. Yet the sheer size of the transactions reminds the market that even the people closest to the business are monetizing at these levels.

The valuation math leaves little room for error. Palantir trades at roughly 62 times sales and carries a trailing price-to-earnings ratio of 154. The soon-to-be-expected P/E ratio hovers above 150. Bulls counter by pointing to a Rule of 40 metric of 145%, which blends growth and profitability, a figure that blows past most software peers. But with that kind of multiple, any stumble in execution could trigger a sharp repricing.

Revenue surges, guidance lifted

Operationally, the company is firing on all cylinders. First-quarter revenue rose 85% to $1.63 billion, with U.S. commercial revenue doubling plus some. The surge prompted management to raise the full-year forecast to between $7.65 billion and $7.662 billion in revenue, from an earlier range. The U.S. commercial business alone is expected to grow more than 120% for the year.

The government side is just as strong. U.S. government revenue nearly doubled, and the remaining deal value — the backlog of signed contracts yet to be recognized — now stands at $11.8 billion. Adjusted free cash flow is guided to $4.2-$4.4 billion for the current fiscal year, and the adjusted operating margin in the most recent quarter hit 60%, a level that makes the lofty valuation at least defensible on fundamentals.

Institutional investors are not entirely backing away. Legal & General Group increased its stake by 351,510 shares, pushing its total holdings above 14 million.

Analyst targets and technical risks

Wall Street remains broadly optimistic. The average price target sits near $184, and Argus Research sees the stock climbing to $190, calling the recent pullback a buying opportunity. The next major test comes with second-quarter results, where the company is targeting around $1.8 billion in revenue. A miss, even a small one, would immediately reignite valuation fears.

On the chart, the €122 area represents a first resistance level for any stabilization attempt. With the stock still nursing a 34% drawdown from its peak, the combination of a USDA win, a bold anti-SaaS strategy, and a massive insider cash-out leaves investors weighing explosive growth against a premium that has already cost them 17% in 2025.