Shares of Palantir Technologies (PLTR 0.51%) fell like a rock on Tuesday, tumbling as much as 15.3%. As of 2:58 p.m. ET, the stock was still down 14.4%.

The catalyst that sent the artificial intelligence (AI) and data mining specialist plunging was the company's quarterly report.

When good isn't good enough

For the first quarter, Palantir generated revenue that grew 21% year over year and 4% sequentially to $634 million. The top line was fueled by strong U.S. commercial revenue, which jumped 40% to $150 million. This marked the company's sixth consecutive quarter of profits under generally accepted accounting principles (GAAP). As a result, adjusted earnings per share (EPS) of $0.08 climbed 60%.

To give those numbers context, analysts' consensus estimates were calling for revenue of $615 million and EPS of $0.08.

Palantir's U.S. commercial customers grew 69% year over year and 19% sequentially. This was driven by its Artificial Intelligence Platform (AIP), which continues to see strong demand. During the past quarter alone, the company conducted 660 customer Bootcamps to train on AIP, far exceeding management's original goal of 500 for the entire year.

So why is the stock falling?

Given the magnitude of Palantir's outperformance, some investors were hoping for a significant boost to its forecast. However, management stuck to its history of conservative guidance. For the full year, Palantir is expecting revenue in a range of $2.677 to $2.689 billion, which fell short of analysts' consensus estimates of $2.71 billion. That said, the company is now forecasting U.S. commercial revenue of at least $661 million, or a growth rate of 45%, up from guidance of 40% in the fourth quarter.

It's still early days for AI, and Palantir is at the forefront of deploying this groundbreaking technology. Investor expectations aside, growth will be lumpy, and guidance will likely continue to be conservative.

Palantir stock isn't cheap in terms of the most widely used valuation metrics, selling for 66 times forward earnings and 15 times forward sales. However, factoring in its growth rate results in a forward price/earnings-to-growth (PEG) ratio of less than 1 -- the standard for an undervalued stock.

Given the long road ahead, investors should simply buy Palantir for the long term and hold on for the ride.