Palantir’s Record Revenue and Expanding Alliances Can’t Shake the Stock’s Valuation Chill

Despite record revenue and expanding partnerships with SAP and Ukraine, Palantir's high valuation multiple and ethical investor scrutiny weigh on market sentiment.

The data analytics firm has never been busier. Revenue surged 85% to $1.63 billion, the order backlog nearly doubled to $12 billion, and new partnerships now stretch from SAP’s cloud migration tools to Ukraine’s battlefield command centers. Yet Palantir’s stock closed Friday at €115.38, down roughly 19% since January and well below its 200-day moving average of about €140. The disconnect between operational firepower and market sentiment is widening.

The culprit is an unrelenting valuation multiple. Palantir trades at 97 times forward earnings — a premium that leaves no room for error. Even after posting its strongest revenue growth in years, the shares slid on the quarterly release. For the current quarter, management targets $1.8 billion in revenue while maintaining an operating margin of 53%, a level analysts say must hold to justify the price tag.

Commercial and Government Fronts Converge

Palantir is working to shed its reputation as a pure government contractor. A newly expanded tie-up with SAP and Accenture integrates SAP migration tools directly with Palantir’s Artificial Intelligence Platform (AIP), automating complex data moves for large corporate clients. Market observers see this as a critical lever to push deeper into civilian enterprise.

Simultaneously, the company is doubling down on its geopolitical presence. CEO Alex Karp met with Ukrainian President Volodymyr Zelenskyy in Kyiv to deepen the AI partnership, which now covers both civilian reconstruction and military applications, including the “Brave1 Dataroom.” Palantir provides the full data backbone for defense and rebuilding projects, increasingly positioning itself as the go-to tech provider for Western allies. The Ukrainian military uses the software to analyze combat data and counter Russian drones — a real-world reference that defense ministries in the West compare directly against offerings from Microsoft and IBM.

That reference, however, comes with baggage. Switzerland’s army ended its use of Palantir’s software late last year after an audit raised concerns about potential data flows to U.S. authorities. Such fears are recurring.

Shareholders Demand Ethical Guardrails

The growing influence of government contracts is drawing pushback from investors. A group called Investor Advocates for Social Justice, representing a triple-digit billion-dollar pool of assets, has filed an SEC petition demanding an independent audit of human rights risks associated with Palantir’s software deployments. The activists warn that neglecting ethical standards could create long-term liability.

The management must address those concerns at the annual general meeting on June 5, 2026. Beyond ESG demands, shareholders want a credible plan to sustain last year’s 85% revenue growth as the base effect sets in.

Analyst Divergence and a Key Monday Meeting

Wall Street remains split on Palantir’s trajectory. Rosenblatt analyst John McPeake recently lifted his price target to $225, calling the company’s software architecture central to enterprise AI adoption. HSBC is far more cautious, cutting its target to $151. The stock got a moment in the spotlight this past Monday when Palantir’s management met with Rosenblatt analysts in New York to discuss second-quarter momentum.

On the product side, this week sees the broad launch of “Global Branching,” a tool designed to let large enterprise clients run more efficient software tests across multiple applications. The feature is part of Palantir’s effort to deepen its commercial footprint and demonstrate that its technology is not only for spies and soldiers.

For now, the market is watching whether the operational momentum can eventually overpower the valuation headwind. With a backlog approaching $12 billion and margins at record levels, the ingredients for a re-rating are there. But the stock needs more than good numbers — it needs a narrative that convinces investors the premium is worth paying.