Palantir (PLTR) Stock: Why Shares Fell After Crushing Earnings Expectations

TLDR

• Palantir reported third-quarter revenue of $1.18 billion, beating analyst expectations of $1.09 billion, with earnings per share of 21 cents versus 17 cents expected.
• The company raised fourth-quarter revenue guidance to $1.33 billion, above the $1.19 billion analyst estimate, and boosted full-year sales expectations to $4.4 billion from $4.17 billion.
• U.S. government revenue jumped 52% year-over-year to $486 million, while U.S. commercial business more than doubled to $397 million.
• Shares dropped about 4-6% in extended and European trading despite the strong results, as the stock has already surged over 170% this year.
• CEO Alex Karp defended the company’s elevated valuation and warned that weaker AI companies “are going to disappear very quickly” as the market matures.

Palantir dropped roughly 4% in after-hours trading and nearly 6% in early Frankfurt trading on Tuesday. This happened even after the company reported third-quarter results that crushed Wall Street expectations.

Palantir Technologies Inc., PLTR

The data analytics firm posted revenue of $1.18 billion for the quarter. Analysts had expected $1.09 billion. Earnings per share came in at 21 cents on an adjusted basis, beating the 17-cent estimate.

Revenue jumped 63% from $725.5 million in the same quarter last year. This marked the second consecutive quarter Palantir topped $1 billion in sales. Net income more than tripled to $475.6 million from $143.5 million a year earlier.

The company also lifted its outlook for the current quarter and full year. Palantir expects fourth-quarter revenue of about $1.33 billion. That’s well above the analyst consensus of $1.19 billion.

For the full year, management now anticipates roughly $4.4 billion in sales. Wall Street had been forecasting $4.17 billion. The company also increased its free cash flow projection to between $1.9 billion and $2.1 billion.

Government Business Drives Growth

The U.S. government segment grew 52% year-over-year to $486 million. Military agencies remain a core customer base for Palantir’s analytics tools. The company recently secured a contract worth up to $10 billion with the U.S. Army.

Government sales have been central to Palantir’s growth story. The company has steadily won business from major legacy contractors. However, the current government shutdown, now in its second calendar month, could pose risks to some contracts.

Palantir has faced some criticism over its work with agencies like U.S. Immigration and Customs Enforcement. CEO Alex Karp has consistently defended the company’s government partnerships.

Commercial Business Accelerates

The U.S. commercial business more than doubled to $397 million in the quarter. Total contract value for U.S. commercial deals closed jumped more than fourfold to $1.31 billion.

Palantir credits much of this growth to adoption of its AI software platform. The company recently announced new partnerships with Snowflake, Lumen, and Nvidia. These deals expand Palantir’s reach in the commercial market.

Retail investors have played a big role in driving Palantir’s stock higher this year. Shares have climbed more than 170% in 2025. The company’s market cap now exceeds $490 billion, placing it among the world’s most valuable tech firms.

The stock trades at high multiples compared to other large tech companies. This has drawn concern from some analysts. In a letter to shareholders, Karp addressed these “detractors” who question the valuation.

Other major tech stocks also traded lower in early Frankfurt trading. Nasdaq futures pointed to a sharply lower start, down 1.3%. Frankfurt-listed shares of Meta, Tesla, Alphabet, Amazon, Nvidia, Apple, and Microsoft fell between 0.9% and 2.6%.

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