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Palantir Stock: Buy, Hold or Sell After 96% Revenue Growth?
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Key Takeaways
Palantir's Q3 revenues surged 96% to $2.313 billion, with U.S. commercial sales jumping 148% year over year.
Palantir raised 2026 revenue guidance to $8.53 billion and reported $6.517 billion in remaining deal value.
Palantir's 110.26 forward P/E far exceeds its industry's 31.98, while shares fell 3.1% after earnings.
Surging artificial intelligence (AI) demand and strong revenue growth have helped Palantir Technologies Inc. (PLTR - Free Report) deliver blowout third-quarter results. However, its shares are falling after earnings, and valuation apprehensions are rising. In this scenario, is Palantir stock a buy, hold, or sell now? Let’s have a closer look –
Palantir’s AI Growth Fuels Record Revenues and Profits
Palantir’s revenues nearly doubled in the third quarter compared with the same period a year earlier. In the third quarter, Palantir’s revenues were $2.313 billion, up 96% year over year, according to the company’s Nov. 2 press release. For the first time, Palantir’s revenues exceeded $2 billion, signaling that demand for the company’s AI and software platform is accelerating.
In particular, the U.S. commercial business surged, and revenues from this segment surpassed the U.S. government segment for the first time. U.S. commercial revenues were $984 million, up 148% year over year, while U.S. government revenues were $953 million, up 96% year over year. This shows that Palantir has been able to expand its AI technology among its private customers and has reduced its dependence on government contracts, which could be a major long-term growth driver.
There is already strong demand for its AI products, as Palantir closed 212 deals worth at least $1 million, 107 deals worth at least $5 million, and 64 deals worth at least $10 million during the third quarter. Moreover, the company’s remaining deal value reached $6.517 billion, up 79% year over year, indicating the possibility of continued revenue growth.
Palantir isn’t just growing revenues; it is converting a portion of that revenue into profits. The company reported a GAAP net income margin of 49%, suggesting strong operational efficiency and potential to scale. The company also has substantial financial resources to expand its business and drive growth. It generated a massive free cash flow of $1.216 billion in the third quarter.
Palantir Stock After Earnings: Buy, Hold or Sell Now?
Palantir’s robust revenues and earnings highlight accelerating demand for its AI products, positioning the company for strong growth in the years ahead. Management raised its full-year 2026 revenue guidance to around $8.53 billion, well above Wall Street expectations, and expects $2.65 billion in fourth-quarter revenues. This should encourage stakeholders to stay invested.
However, new investors should exercise caution before investing in Palantir stock at its current lofty valuation. This is because elevated market expectations mean that any disappointment in performance could pull the shares down. This was evident as shares fell 3.1% in after-hours trading following the earnings announcement. The decline was partly because of slower year-over-year growth in U.S. commercial contract value compared with the previous quarter.
Nonetheless, Palantir remains significantly overvalued compared to the Internet - Software industry, with a forward price-to-earnings (P/E) ratio of 110.26 compared to the industry’s 31.98.
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Palantir Stock: Buy, Hold or Sell After 96% Revenue Growth?
Key Takeaways
Surging artificial intelligence (AI) demand and strong revenue growth have helped Palantir Technologies Inc. (PLTR - Free Report) deliver blowout third-quarter results. However, its shares are falling after earnings, and valuation apprehensions are rising. In this scenario, is Palantir stock a buy, hold, or sell now? Let’s have a closer look –
Palantir’s AI Growth Fuels Record Revenues and Profits
Palantir’s revenues nearly doubled in the third quarter compared with the same period a year earlier. In the third quarter, Palantir’s revenues were $2.313 billion, up 96% year over year, according to the company’s Nov. 2 press release. For the first time, Palantir’s revenues exceeded $2 billion, signaling that demand for the company’s AI and software platform is accelerating.
In particular, the U.S. commercial business surged, and revenues from this segment surpassed the U.S. government segment for the first time. U.S. commercial revenues were $984 million, up 148% year over year, while U.S. government revenues were $953 million, up 96% year over year. This shows that Palantir has been able to expand its AI technology among its private customers and has reduced its dependence on government contracts, which could be a major long-term growth driver.
There is already strong demand for its AI products, as Palantir closed 212 deals worth at least $1 million, 107 deals worth at least $5 million, and 64 deals worth at least $10 million during the third quarter. Moreover, the company’s remaining deal value reached $6.517 billion, up 79% year over year, indicating the possibility of continued revenue growth.
Palantir isn’t just growing revenues; it is converting a portion of that revenue into profits. The company reported a GAAP net income margin of 49%, suggesting strong operational efficiency and potential to scale. The company also has substantial financial resources to expand its business and drive growth. It generated a massive free cash flow of $1.216 billion in the third quarter.
Palantir Stock After Earnings: Buy, Hold or Sell Now?
Palantir’s robust revenues and earnings highlight accelerating demand for its AI products, positioning the company for strong growth in the years ahead. Management raised its full-year 2026 revenue guidance to around $8.53 billion, well above Wall Street expectations, and expects $2.65 billion in fourth-quarter revenues. This should encourage stakeholders to stay invested.
However, new investors should exercise caution before investing in Palantir stock at its current lofty valuation. This is because elevated market expectations mean that any disappointment in performance could pull the shares down. This was evident as shares fell 3.1% in after-hours trading following the earnings announcement. The decline was partly because of slower year-over-year growth in U.S. commercial contract value compared with the previous quarter.
Nonetheless, Palantir remains significantly overvalued compared to the Internet - Software industry, with a forward price-to-earnings (P/E) ratio of 110.26 compared to the industry’s 31.98.
Image Source: Zacks Investment Research
Palantir currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.