After Monday’s market close, Palantir Technologies (NASDAQ: PLTR) reported a remarkable first quarter. Revenue rose 85% year over year — the artificial intelligence (AI) data analytics specialist’s fastest growth rate as a public company — and management raised its full-year revenue guidance from 61% growth to 71%. With numbers like these, some investors may be wondering if the AI-focused software company now deserves the AI throne — in terms of investor attention — currently held by AI chipmaker Nvidia (NASDAQ: NVDA).
But there’s a catch: A great business doesn’t always translate to a great stock. And while Palantir’s results may be extraordinary, the stock’s valuation could already price in years of equally extraordinary execution.
Image source: Getty Images.
Palantir’s first quarter was nothing short of astounding. But does it live up to its sky-high valuation?
After Monday’s market close, Palantir Technologies (PLTR +1.27%) reported a remarkable first quarter. Revenue rose 85% year over year — the artificial intelligence (AI) data analytics specialist’s fastest growth rate as a public company — and management raised its full-year revenue guidance from 61% growth to 71%. With numbers like these, some investors may be wondering if the AI-focused software company now deserves the AI throne — in terms of investor attention — currently held by AI chipmaker Nvidia (NVDA +0.04%).
But there’s a catch: A great business doesn’t always translate to a great stock. And while Palantir’s results may be extraordinary, the stock’s valuation could already price in years of equally extraordinary execution.
Image source: Getty Images.
Growth keeps speeding up
The growth story at Palantir remains truly exceptional. In fact, it’s getting better.
The company’s year-over-year revenue growth rate climbed sequentially in every quarter of 2025, going from 39% to 48% to 63% to 70%. With the first quarter of 2026 now in the books, that streak is up to 11 consecutive quarters of accelerating growth — and 85% is the highest reading yet.
Even more striking is what’s happening specifically in Palantir’s U.S. business.
U.S. revenue rose 104% year over year to $1.28 billion — the first time that figure has cleared 100% growth since Palantir went public. The U.S. commercial segment surged 133% to $595 million, and U.S. government revenue rose 84% to $687 million, accelerating from 66% growth in the fourth quarter. The company ended the quarter with 615 U.S. commercial customers — up 42% from a year ago.
Profitability inflected too. Palantir’s first-quarter net income roughly quadrupled to $871 million, lifting first-quarter earnings per share to $0.34 — up from just $0.08 a year earlier. Adjusted operating income hit $984 million, equating to a 60% margin.
“Our financial results now demonstrate a level of strength that dwarfs the performance of essentially every software company in history at this scale,” said Palantir CEO Alex Karp in the company’s first-quarter shareholder letter.
Management’s updated outlook backs that up. Palantir now expects 2026 revenue of roughly $7.66 billion at the midpoint, implying about 71% year-over-year growth — a meaningful step up from the 61% guidance issued in February.
Going further, Karp also told CNBC he expects Palantir’s combined U.S. business, both government and commercial, to double again in 2027.
Palantir Technologies
Today’s Change
(1.27%) $1.83
Current Price
$145.90
The valuation problem doesn’t go away
But all of this success may already be reflected in the stock — and then some. With shares trading near $144 as of this writing, the AI software specialist commands a market capitalization of about $350 billion. Stack that against trailing-12-month revenue of roughly $5.2 billion and trailing-12-month net income of about $2.3 billion, and the stock trades at a price-to-sales ratio close to 67 and a price-to-earnings ratio near 150.
Now consider Nvidia. The chipmaker’s most recent fiscal quarter (the period ended Jan. 25, 2026) saw revenue jump 73% year over year to $68.1 billion, with data center revenue climbing 75% to $62.3 billion. And guidance for the fiscal first quarter of 2027 calls for $78 billion in revenue, implying roughly 77% year-over-year growth. And the company finished its fiscal year with $120 billion in net income on $216 billion in revenue.
Despite a comparable growth trajectory, Nvidia trades at a price-to-earnings ratio of about 41 and a price-to-sales ratio close to 23. Its market cap of around $4.8 trillion is a far bigger number in absolute terms, of course, but the valuation multiples on its underlying earnings and sales are dramatically lower.
Of course, Palantir’s narrower focus on high-growth AI software may deliver faster long-term growth with less cyclicality. But this optimistic view may already be priced in.
Ultimately, I think that for investors choosing between the two AI giants today, Nvidia looks like the better way to play the AI build-out. Palantir’s business may continue to fire on all cylinders — but its valuation simply remains extremely difficult to justify.
