Palantir stock drops 7% despite 85% revenue growth and raised guidance; VanEck Semiconductor ETF offers diversified AI chip exposure with 66% average annualized 10-year returns at lower valuation.

Palantir posted revenue growth of 85% year over year and net income increase of 306%, and raised fiscal year revenue guidance to $7.65 billion to $7.66 billion (a 71% increase over last year). However, the stock price declined 7% after the earnings report was released.

The stock decline follows a 20% year-to-date drop to around $140 per share. Palantir trades at a price-to-earnings ratio of 180 and forward P/E of 110, down from 412 and 177 at the start of the year, which investors view as unsustainable relative to growth expectations.

The VanEck Semiconductor ETF (SMH) returned 76% year to date and 155% over the past 12 months, with average annualized returns of 66% over the past five and ten years. It tracks the 25 largest U.S. semiconductor stocks, including Nvidia, Taiwan Semiconductor Manufacturing, and Micron Technology, and trades at a P/E ratio of 49.