Since the its initial public offering (IPO) in late September, the shares of Palantir Technologies (NYSE:PLTR) have logged impressive gains, up about 190%. This has put the market capitalization at $48.7 billion. Although, as has been the case with other hot tech operators lately, PLTR stock has come under pressure. The price has gone from a high of $45 to $26.70.

Founded in 2003, Palantir has become one of the top players in developing sophisticated AI (Artificial Intelligence) and ML (Machine Learning) systems. Last year, the company posted $1.1 billion in revenues, up about 47% on a year-over- year basis.

When the company started, the focus was on government customers. Often the applications were to help with confidential activities like hunting down terrorists. There was even speculation that Palantir helped to locate Osama bin Laden.

But over the past decade, Palantir has leveraged its technologies into commercial markets and has been able to snag customers like BP (NYSE:BP), Rio Tinto (NYSE:RIO) and PG&E (NYSE:PCG). This expansion of the business has increased the market potential to a staggering $119 billion.

OK then, what now for PLTR stock? With the recent weakness, is there an opportunity here? Well, I actually think investors should be patient on this. There are some nagging issues with the company.

Let’s take a look.

The Growth Story

It’s important to note that – during the history of Palantir – the growth has been choppy and inconsistent. And this should not be a surprise. The company’s contracts are large and usually last several years. As a result, the sale cycle can be tough and prolonged.

This appears to have been evident in the latest quarter, as the growth ramp is starting to decelerated. Based on the full-year forecast, the revenues are expected to increase about 30%.

Granted, this may be a conservative forecast. But then again, it is still does look like there will some headwinds this year.

Valuation of PLTR Stock

Yes, when it comes to stocks nowadays, valuation has not necessarily been an issue. But this sentiment is starting to change. If a company is unable to keep up the growth ramp, there could be more selling. As for PLTR stock, the multiple is still at a hefty 24 times sales.

Something else: There has been notable insider selling at the company. When the IPO lock-up expired, the chief operating officer, Shyam Sankar, sold 757,510 shares at prices that ranged from $24.59 to $29. There was also the unloading of 2.7 million shares from three other executives.  All in all, this is an indication that it could be tough for Palantir meet Wall Street expectations.

The Commercial Business

Palantir has two major software platforms. First, there is Gotham, which is focused on the needs of defense and intelligence agencies. The technology is essentially about “finding the needle in the haystack” by analyzing enormous amounts of data.

Next, Palantir has the Foundry platform. And yes, it is primarily for commercial customers. The technology has been effective in helping to solve problems across a wide-array of industries like banking, pharmaceuticals, retail, insurance, energy and so on.

Now the government business has done extremely well. Indeed, revenue from government customers were reported at $132 million, which is an 85% increase from last quarter.

But the commercial side is another story. The revenues were up a mere 4% in the quarter $132 million.

Why is this so? First of all, the Foundry technology is less mature. But the commercial category is also much more competitive. Palantir must fight against top companies like C3Ai (NYSE:AI). And with the continued surge in venture funding in Silicon Valley, there are startups emerging to capitalize on the AI opportunity.

It could get even tougher for Palantir to find new business and keep up the growth.

On the date of publication, Tom Taulli did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.

Tom Taulli (@ttaulli) is the author of various books on investing and technology, including Artificial Intelligence Basics, High-Profit IPO Strategies and All About Short Selling.  He is also the founder of WebIPO, which was one of the first platforms for public offerings during the 1990s.