Palantir Stock Is Down 19% From Its Highs. Time to Buy the Dip?

Palantir Technologies (PLTR -9.73%) experienced a significant drop in stock price, falling approximately 19% from its peak. Despite this decline, the company's recent Q3 earnings report indicates strong business performance and potential for long-term growth. Palantir's revenue increased by an impressive 96% year-over-year, reaching $2.31 billion.

Notably, U.S. commercial revenue grew by 148% to a total of $984 million, surpassing government contract revenue for the first time. With only 1,090 customers, Palantir managed to close 212 deals worth $1 million or more, including 64 deals worth at least $10 million. Analysts estimate that Palantir's earnings will grow by an average of 43% over the next three to five years, which justifies its current expensive valuation of more than 75 times trailing-12-month revenue and over 150 times earnings.

The company's unique middle-layer position between AI companies, their models, and enterprises or government customers seeking to utilize AI technology is a key driver of its success. By enabling customers to use AI without exposing their proprietary data or trade secrets to frontier AI labs, Palantir has positioned itself as a valuable middleman.

Examples such as L3Harris Technologies and Tampa General Hospital demonstrate how Palantir's technology can provide efficiency gains and security for businesses handling sensitive information. While the broader AI infrastructure boom may be facing challenges, Palantir's business model and strong earnings performance suggest that it could continue to grow even if the infrastructure boom cools.

For patient investors who believe in the long-term future of AI, Palantir could be a compelling buy on its recent dip.