Palantir (PLTR) stock fell 7% on Tuesday after the company’s Q1 earnings failed to impress investors amid concerns about how AI may disrupt the software space.

The company’s revenue jumped 85% in the first three months of this year to $1.63 billion, beating the consensus estimate of $1.53 billion. The majority of that revenue, or $1.28 billion, came from the US alone.

Palantir said its US business more than doubled over 12 months.

Still, Palantir shares took a hit as investors weighed the results against growing competition from AI developers OpenAI and Anthropic.

“Valuation is part of it,” Adam Coons, chief investment officer at Winthrop Capital, told Yahoo Finance.

Coons pointed to “that competitive landscape and kind of how that eats away at the future value.”

Palantir is seen as a beneficiary of US government contracts across an array of agencies, including the Pentagon, the Department of Homeland Security, and even the US Department of Agriculture.

CEO Alex Karp pushed back against those who bet against Palantir’s success and questioned the impact of AI on its business.

“When the whole world said software had to be worthless, we built platforms that work,” Karp said during the company’s earnings call.

“How can a company grow 100% in the US with functionally a non-existent salesforce,” he added.

Adjusted earnings per share rose more than 150% to $0.33, beating estimates of $0.28.

The company raised its full-year revenue guidance to $7.65 billion to $7.66 billion, up from prior guidance of $7.182 billion to $7.198 billion.

It also raised its US commercial revenue forecast for the year to $3.22 billion, up 120% from a prior growth projection of 115%.

Read more: Live coverage of corporate earnings

The company has seen accelerating business sales growth, with sales to major corporations such as Nvidia (NVDA), Airbus (AIR.PA), and Stellantis (STLA).

Last quarter, Palantir said it closed 206 deals of at least $1 million, 72 deals of at least $5 million, and 47 deals of at least $10 million

Shares of Palantir have been recovering from an earlier sell-off as the software sector has been hit amid concerns about AI disrupting business models.

Last month, President Trump gave a shout-out to the company on social media, praising Palantir for its “great war fighting capabilities and equipment.”

The stock has risen 15% since the April 10 post.

Palantir has been a top gainer of the AI trade, surging 150% in 2025 and over 1,200% over the past five years.

Last week, Oppenheimer analysts initiated coverage of Palantir with an Outperform rating, citing its leadership in AI and its ontology-based architecture, which creates high switching costs once its applications are embedded.

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