Palantir’s Ukraine Showcase Can’t Shake the Stock’s Valuation Hangover

Alex Karp’s face-to-face with Volodymyr Zelenskyy in Kyiv on Tuesday was everything Palantir could want from a product demonstration: a real war, real data, and a president grateful for the help. But back on Wall Street, the stock keeps bleeding. The same AI wizardry that drives drone intercepts and battlefield intelligence in Ukraine has pushed Palantir’s revenue into overdrive, yet the share price has surrendered more than a fifth of its value since January.

The meeting cemented Palantir’s role as the go-to platform for military AI. Zelenskyy called it a “good meeting” and praised the company’s global reputation. Defence Minister Mykhailo Fedorov highlighted three specific uses: analysing air strikes, processing reconnaissance data, and planning long-range operations. The backbone is Brave1 Dataroom, where more than 100 Ukrainian companies now train over 80 AI models — many focused on detecting and destroying aerial targets under conditions that no simulation can replicate. Palantir has been on the ground since June 2022, and its MetaConstellation software fuses satellite, drone and sensor feeds into a single operational picture. For the US and European defence ministries watching, it’s a live-fire demo that no PowerPoint can match.

Revenues rocket, pipeline doubles

That operational heft shows up in the numbers. First-quarter revenue surged 85% year-on-year to $1.633 billion — the fastest growth in at least six years — while US commercial revenue more than doubled, climbing 133%. Adjusted earnings per share blew past analyst estimates. The remaining contract value hit $11.8 billion, nearly double the prior year, and the GAAP margin reached 53%. Demand from government clients is so intense that Palantir is turning away commercial work because its teams simply can’t keep up.

Yet the stock closed Wednesday at €111.18, down roughly 4% on the session and 22.31% below its start to 2025. The distance from last November’s all-time high of €179.86 is widening. Investors are rotating out of high-multiple winners and into laggards, and Palantir remains a prime candidate for profit-taking.

Should investors sell immediately? Or is it worth buying Palantir?

The price of being a premium name

The valuation gap is glaring. Palantir trades at about 93 times forward earnings and 154 times trailing earnings — a massive premium over the rest of the software sector. Morningstar sees fair value at $153, citing high uncertainty around the addressable market and competition from OpenAI and Anthropic. The Wall Street consensus target sits at $183.73, with Argus recently reaffirming $190. But insider sales underscore the tension: executives have unloaded $432.1 million worth of shares over the past few months.

Adding to the complexity, Palantir’s deep ties to US intelligence carry a geopolitical cost. Swiss auditors flagged the risk of unauthorised data flows to America, prompting the Swiss army to cut ties with Palantir at the end of 2025. And the company’s work in Ukraine has reportedly landed Karp on a Kremlin death list, according to British media. Such headlines don’t help a stock already under valuation scrutiny.

What comes next

The next hard test arrives with the second-quarter report. Management guided for revenue between $1.797 billion and $1.801 billion. Karp has also projected that the US business will double again by 2027. Those are heady ambitions for a company whose share price is being held hostage by its own multiple. For now, Palantir remains a story of operational brilliance and market caution — a rare combination that will only resolve when earnings catch up to the price investors are being asked to pay.