Palantir Just Dropped 14% But What Does The Company Actually Do?

For a company that wants to be the operating system for the modern world, Palantir’s recent stock plunge was a harsh reboot. After surging 63% year-to-date, expectations were sky-high heading into Q1 2025 earnings. Revenue growth came in strong at 39%, U.S. commercial sales soared 71%, and net income doubled—but none of it was enough. With international sales dipping and guidance merely good (not great), investors hit the eject button, erasing as much as $50 billion in market cap.

What Palantir Actually Does

Palantir isn’t your average software firm. It builds high-powered data platforms that help organizations—from U.S. defense agencies to Ferrari—make sense of complex information. Its core products include Gotham (used by military and intel agencies), Foundry (a data integration and analytics tool for enterprises), and Apollo (which keeps everything updated). Add in the newer AIP platform, which layers AI and large language models on top of these systems, and you get a tech stack aimed at turning messy datasets into smart decisions. Whether it’s mapping battlefield risks or streamlining factory logistics, Palantir wants to be the digital brain behind it all.

Growth Is Real, But So Is the Valuation Risk

Financially, Palantir is firing on most cylinders. It’s now five quarters into GAAP profitability, operating margins are climbing, and cash flow is among the best in class. In Q1 2025 alone, it generated $370M in free cash flow on $884M in revenue. That said, it’s trading like the second coming of AI—with a forward P/E over 200 and a price-to-sales ratio nearing 80. For comparison: Salesforce sits around 7. Analysts are split, with some raising targets past $130, while others say the valuation leaves no room for error. If growth slows—or just doesn’t blow the roof off—the comedown could be steep.

Still, in a world increasingly run on data and algorithms, Palantir’s tools are built for the moment. But in markets, even the future has to be priced right.