Palantir’s European Expansion Hits a Wall as Earnings Test Looms

Palantir Technologies confronts a US FOIA lawsuit over IRS data sharing and political opposition in the UK and Germany, with Q1 earnings due May 4 amid a 15% stock decline.

The data analytics firm Palantir Technologies is navigating a turbulent period on two fronts: a legal challenge in the US over government transparency and a growing political backlash in Europe that threatens to derail its international growth ambitions. With quarterly earnings due on May 4, the company faces heightened scrutiny from investors who have already driven the stock down roughly 15% year-to-date.

Legal Heat in Washington

A fresh lawsuit from the watchdog group American Oversight has pulled back the curtain on Palantir’s relationship with the Internal Revenue Service. Court documents reveal that the IRS’s criminal investigation division has been using Palantir’s software since 2018 to combat financial crime, paying the company a total of $130 million. The platform aggregates sensitive data from multiple federal databases, including tax returns, bank transactions, and even cryptocurrency holdings such as Bitcoin and Ethereum.

The lawsuit, filed against the Trump administration, alleges that several federal agencies are violating the Freedom of Information Act by withholding documents about how personal data is shared through Palantir’s systems. Critics have raised concerns about the consolidation of vast amounts of personal information into a single platform.

Political Headwinds in Europe

Across the Atlantic, Palantir’s expansion plans are running into serious opposition. In the UK, a potentially lucrative deal with the London Metropolitan Police to supply AI systems for crime-fighting is in jeopardy. The contract, valued in the tens of millions of pounds, faces resistance from London Mayor Sadiq Khan, whose office has signaled it will block any procurement over £500,000 that conflicts with the city’s values.

In Germany, the situation is equally challenging. Thomas Daum, who leads the country’s cyber defense unit, has ruled out new projects with Palantir for the foreseeable future. Speaking to Handelsblatt, Daum stated that granting industrial companies access to national databases is currently unthinkable.

The Stock’s Struggle

These headwinds have weighed heavily on Palantir’s share price. The stock now trades at around €121-122, well below its 200-day moving average. Prominent short sellers, including Michael Burry, have added to the pressure by maintaining put options against the software company.

Despite the recent correction, Palantir’s valuation remains stretched. The forward price-to-earnings ratio for 2026 stands at 111, leaving little room for error when the company reports its first-quarter results on Monday after the US market close.

What Wall Street Expects

Analysts have set a high bar for the upcoming earnings report. Consensus estimates call for revenue of $1.54 billion and earnings per share of $0.28, which would represent more than a doubling from the same period last year. The growth rate compared to the prior year is approximately 74%.

A bright spot for the business is a new $300 million contract with the US Department of Agriculture. CEO Alex Karp has also been buying shares, acquiring nearly 1.5 million shares between January and April, a move that market observers interpret as a vote of confidence.

The Make-or-Break Moment

Investors will be watching closely for details on the USDA project and, crucially, Palantir’s full-year guidance. The company is targeting revenue of roughly $7.2 billion for 2026. If the European hurdles force the company to lower that target, the stock could face another sharp decline. With the legal battle in Washington and political resistance in London and Berlin, Palantir’s management has little margin for error when it delivers its quarterly scorecard.