Despite impressive revenue growth and raised guidance, analysts question whether the AI defense firm’s sky-high valuation is sustainable.
Palantir Technologies (PLTR) shares tumbled more than 6% in premarket trading Tuesday, nearly erasing the prior day’s gains, as Wall Street debated whether the company’s solid third-quarter results justified its lofty valuation. The stock, which has surged over 170% this year, closed Monday at a record high before slipping amid analyst caution.
The defense and artificial intelligence software firm posted adjusted earnings per share of $0.21, surpassing Wall Street’s $0.17 forecast and more than doubling last year’s $0.10. Revenue rose 63% year-over-year to $1.18 billion, exceeding Bloomberg’s consensus estimate of $1.09 billion. The company credited its U.S. operations for the outperformance — government contract revenue jumped 52% to $486 million, while U.S. commercial sales soared 121% to $397 million.
Palantir also raised its full-year revenue forecast from $4.15 billion to $4.4 billion and projected fourth-quarter revenue of over $1.3 billion, topping analyst expectations. However, despite this optimism, several analysts voiced concern over the company’s steep valuation. Jefferies analyst Brent Thill maintained an “underperform” rating, warning that “the current valuation is susceptible to any downtick in the AI hype cycle.” Palantir’s forward 12-month price-to-earnings ratio stands at 230 — far above the 35 average for major Big Tech peers.
CEO Alex Karp described the company’s U.S. commercial division as “an absolute juggernaut,” but Wall Street remains divided over whether growth momentum can keep pace with its soaring market expectations.
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