Palantir’s 300% Profit Surge and Burry’s Bearish Bet: A Study in Market Contradictions

Palantir Technologies delivered what many would call a textbook blowout quarter — net income quadrupled, US commercial revenue more than doubled, and management raised its full-year guidance. The stock promptly fell over 7%. That disconnect has only deepened as legendary short-seller Michael Burry placed a significant bet against the data analytics firm, wagering that its current valuation defies fundamentals.

The Numbers That Should Have Sparked a Rally

For the first quarter of 2026, Palantir reported total revenue of $1.63 billion, with GAAP net income hitting $871 million — a roughly 400% surge from the prior year that translated into a net margin of 53%. Earnings per share came in at $0.34 on a GAAP basis, while adjusted EPS of $0.33 beat analyst consensus estimates.

The US business was the standout performer. Commercial revenue in the region jumped 133% to $595 million, with the customer base expanding 42% to 615 companies. CEO Alex Karp has signaled he expects this segment to double again by 2027. Government contracts added another $687 million, up 84% year-over-year, fueled by the integration of Palantir’s Maven AI platform as an official Pentagon program and a USDA contract worth up to $300 million that closed in April. Combined, US revenue doubled to $1.28 billion.

Cash generation was equally impressive. Adjusted free cash flow reached $925 million, representing a 57% margin, while the company ended the quarter with $8 billion in liquid assets — a war chest that provides considerable strategic flexibility.

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

The Valuation Wall That Keeps the Stock Down

Despite these metrics, Palantir’s shares have lost nearly 19% since the start of 2025 and now trade at roughly €117, some 35% below their November peak and about 17% beneath the 200-day moving average. The relative strength index sits near 40 — not yet oversold, but the trajectory is unmistakably bearish.

The math is unforgiving. With a forward price-to-earnings ratio around 192 and a price-to-sales multiple near 44, even a record quarter struggles to justify the premium. As one analyst put it, every disappointment is expensive when expectations are priced for perfection.

Stock-based compensation adds another layer of concern. At 15.3% of revenue in the latest quarter, it dilutes shareholder returns in ways that some analysts view as a structural drag on real value creation.

Burry’s Bet and Insider Selling Add Pressure

Michael Burry, the investor who famously shorted the US housing market before the 2008 crisis, has opened a significant short position against Palantir. His put options on various instruments, including Palantir, now represent nearly 7% of his portfolio. Burry reportedly sees the stock’s fair value in the low double digits at best, and his position targets not just the valuation but the business model and Karp’s leadership directly.

Insider selling has reinforced the bearish narrative. Over the past three months, company insiders have offloaded shares worth approximately $435 million. For short sellers, these persistent sales at the executive level provide additional ammunition.

Palantir at a turning point? This analysis reveals what investors need to know now.

A Deeply Divided Wall Street

The analyst community remains sharply split. Citi and Wedbush maintain buy ratings with price targets as high as $230, arguing that Palantir’s growth trajectory justifies the multiple. Jefferies, by contrast, continues to recommend selling, pointing to the lack of margin for error at current levels.

For the second quarter, Palantir has guided for revenue between $1.797 billion and $1.801 billion. The full-year forecast was raised to approximately $7.65 billion, implying growth of roughly 71%. That sets the bar higher than ever — and the market will get its next test in August, when the company reports Q2 results and must prove it can deliver on those ambitious targets.

Ad

Palantir Stock: New Analysis - 9 May

Fresh Palantir information released. What's the impact for investors? Our latest independent report examines recent figures and market trends.

Read our updated Palantir analysis...

en | US69608A1088 | PALANTIR’S | boerse | 69295594 |