After investigating Palantir (NYSE:PLTR) further, I’ve found more reasons to be worried about PLTR stock. Despite the company’s large year-over-year (YOY) growth rates in the first quarter, there are signs that Palantir’s top-line expansion is stagnating. Its net losses rapidly increased on a YOY basis last quarter and in all of 2020.

What’s more, my research indicates that Palantir may struggle to take high-margin business from at least two of its competitors: Alteryx (NYSE:AYX) and IBM (NYSE:IBM).

Signs of Revenue Deceleration

In Q1, Palantir’s top line increased 49% YOY versus a 40% YOY gain in Q4. In Q3, its top line rose 52% YOY, and its sales climbed 47% in all of 2020.

In the last two reported quarters, the company’s revenue has advanced by an average of 44.5%, well below its YOY growth in Q3 (52%) and the increase it reported for all of 2020 (47%).

Additionally, Palantir expects sales to climb over 30% in all of 2021. Assuming its top-line growth comes in below 40% this year, its 2021 revenue increase would be below the gains it generated in each of the last three quarters.

Even if Palantir’s sales rise 39% this year, its annual growth rate will have dropped by eight percentage points versus 2020.

Finally, although Palantir’s top line increased 49% in Q1 and revenues are expected to jump 43% in Q2, it did not raise its 2021 top-line guidance. This suggests the company anticipates its quarterly YOY growth in Q3 and Q4 to average 32% at best. That’s assuming, again, that Palantir’s 2021 YOY growth will come in below 40%.

I’ve been concerned about Palantir’s profitability for some time now. With this new set of numbers, I noticed that the company’s net loss jumped tremendously on a YOY basis. In Q1 of 2021, it soared to over $123 million versus slightly above $54 million during Q1 2020.  In all of last year, the company’s net loss jumped to $1.17 billion, roughly doubling from just under $580 million in 2019.

PLTR Stock Has Two Very Tough Competitors

In recent columns, I’ve warned that Palantir has a lot of competitors.

But this time, I discovered that at least two of its direct competitors — Alteryx and IBM — are highly rated. These user reports indicate the companies may not yield much market share to Palantir.

According to research firm Gartner, 96% of Alteryx’s customers who responded to a question on Gartner’s page recommend that company’s products The corresponding percentage comes in at only 50% for Palantir.  Additionally, of the 145 customers of Alteryx who reviewed the company on G2, 137 gave it four or five stars. Many customers had very positive things to say about the company in their reviews, including, “it really does deliver the ‘Thrill of solving’,” and, “great for handling large sizes of data.”

Alteryx reportedly has some very large corporate customers, including Hyundai (OTCMKTS:HYMTF), Chick-fil-a, Coca-Cola (NYSE:KO), and Cisco (NASDAQ:CSCO).

Meanwhile, 78 of 85 of surveyed customers of IBM Watson Studio, a direct competitor of Palantir, gave the IBM unit four or five stars. I read several of the reviews of IBM Watson, and all of those I examined were very positive. For example, one reviewer wrote, “Amazing!” and, “everythings [sic] worked well.” Another wrote, “Amazing interface” and, “the platform are [sic] all incredible.” A third stated, “Quick and easy deployment capability for machine learning and data science solutions.”

The Future Looks Dim for PLTR Stock

Considering that Palantir has been in business since 2003 and generated $1.1 billion of sales last year, which is not a huge amount, its revenue deceleration is concerning. Also quite concerning are the large increases in its net losses.

Finally, Palantir is going up against two apparently well-respected competitors in Alteryx and IBM. The latter two companies’ considerable strengths and satisfied user base may complicate Palantir’s efforts to gain enough high-margin market share to become profitable. Consequently, I still recommend that investors sell PLTR stock.

On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 14 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015.  Among his highly successful, contrarian picks have been GE, solar stocks, MGM, and Snap. You can reach him on StockTwits at @larryramer.