Is Palantir Stock a Buy After its Latest Earnings Report?
Key PointsPalantir’s revenue grew 96% to $2.31 billion, and U.S. commercial sales topped U.S. government sales for the first time.
Palantir Technologies (PLTR) stock has been a long-time favorite of the author, with a previous projection of reaching $220 by the end of 2026. However, after the company's third-quarter earnings report, the stock price dropped more than 5%, landing it 16% below its all-time high. This decline was primarily driven by a slowdown in total contract value (TCV), which only grew 6% year-over-year, despite a significant 49% increase in Q2.
Despite the disappointing contract growth, Palantir's revenue continued to soar, reaching $2.31 billion in the third quarter, a 96% increase from the previous year. The company's U.S. commercial revenue grew 148% to $984 million, surpassing its U.S. government revenue of $953 million. For the first time, Palantir's revenue from commercial customers exceeded that from its government business.
The author argues that Palantir's Artificial Intelligence Platform (AIP) is a game-changer, enabling businesses to integrate AI models with their existing data to make decisions and improve efficiency. This has resulted in a surge in U.S. commercial customers and a record number of multi-million dollar deals.
The author points out that the slowdown in contract growth may raise questions about whether Palantir's revenue growth can sustain its premium valuation, which currently stands at 108 times forward earnings and 51 times forward sales. However, the author remains optimistic about Palantir's long-term prospects, particularly the growing commercial market and the company's innovative AIP.
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