Things should be looking up for Palantir (NASDAQ:PLTR) stock. After all, yesterday (4 May), the company released its first-quarter earnings for 2026, which did not disappoint. In fact, they showed an acceleration of the business’s fortunes.

The share price has since fallen by 5.8%, though. So, let’s take a deeper look into the company’s earnings and see whether there is a potential opportunity for investors.

So much to be optimistic about

Reading Palantir’s quarterly earnings report, there are a lot of reasons to be optimistic about the firm’s future:

• Overall revenue grew 85% year on year; the company’s highest ever growth rate.
• US commercial revenue grew by 133%.
• US government revenue grew by 84%.
• Net income increased from $218m to $876m.

What’s so great about these results is that they represent the eleventh consecutive quarter of accelerating growth. In the final quarter of 2025, revenue growth was 70%. In the first quarter of 2025, growth was 39%. This, therefore, marks a clear acceleration.

Moreover, the firm’s guidance provides further excitement. It’s expecting revenue of $7.650-$7.662bn for the full year. This represents a growth rate of 71% from 2025. It’s also an uplift from the 61% guidance for growth that was issued in February.

Considering that revenue was only $2.2bn for 2023, Palantir stock has been one of the best growth stories of recent times.

But not all is about growth, as valuation should also be considered.

Valuation issues persist

One of investors’ biggest qualms with Palantir stock has been its stupidly high valuation.

Right now, the company’s shares sport a price-to-sales ratio of 71.9… very pricey!

And the price-to-earnings (P/E) ratio of its shares is 164.1. This would put many investors off.

However, the P/E has been falling, making the firm’s shares look relatively cheap compared to what they previously were. It had a P/E of 607.2 at the end of September 2025.

Its forward P/E is also only 113.6. Considering that its shares have only fallen by 33.7% since they peaked in early November 2025, most of this fall can be attributed to the company growing into its valuation.

We can already see that the firm is growing at a tremendously quick pace. So, while the valuation might be a bit too much for many investors, I can see this falling very soon, as the firm’s growth accelerates.

One of AI’s best prospects

There are definitely risks for Palantir. For example, there is intense competition in the AI space, particularly with the rise of agentic AI platforms, such as Anthropic’s Claude, which could seriously challenge the company’s business model.

However, on the whole, I still believe Palantir stock is one of the most promising opportunities for investors to consider in the AI space.

Its artificial intelligence platform (AIP) has been a big winner among commercial clients. This is evident from its US commercial customers growing 42% year on year this quarter.

I believe that Palantir stock has ultimately fallen because of valuation concerns, despite its stellar quarterly results.

For patient and long-term focused investors, I don’t think valuation should be a sticking point, as the company could very quickly grow into this.

Therefore, I think today’s share price fall definitely represents an opportunity for investors to consider buying its shares.