Packaged Software · #22 in the Retail 100

Palantir Technologies

PLTR

The war-driven defense buildup↑AI eats software↓

Our rating: buylow conviction
12-month target: $229.40 +30.8%
Expected vs. S&P 500: +12.3 ptsSee the math
Next earnings: Feb 1In 88 daysEarnings calls page ↗

Palantir's revenue nearly doubled last quarter, but new contract value grew only 6%, so sales are growing much faster than the deals that feed them.

Summary

Palantir sells software that lets governments and companies run their operations on their own data and AI models. Revenue nearly doubled in the third quarter, and U.S. companies now bring in more than the U.S. government for the first time. The stock fell about 1.6% the next day because new contract value grew only 6%. The shares depend on revenue growing about 50% in 2027, to the roughly $13.0B analysts expect.

$175.40

-$6.19 (-3.41%)Past year

What Palantir Technologies does

Palantir's software pulls an organization's data into one model of its operations so people and AI can act on it. It runs trials at its own cost, then grows by selling more to each customer.^1,21,22,23

What it sells

Government software51% of revenue, Q2 2026
Mainly Gotham and AIP for defense, intelligence and civilian agencies. The U.S. government alone was 41% of revenue in Q3 2026.
Commercial software49% of revenue, Q2 2026
Foundry and AIP, which connect a company's data to AI models. U.S. companies were 43% of revenue in Q3 2026, the fastest-growing group.

Who buys it

Governments and large companies, led by the U.S. government. The top three customers were 16% of 2025 revenue, and the top 20 averaged $124 million each over the past year. U.S. customers were 84% of revenue in Q3 2026.

Where you've seen it

Rarely in person. Its software runs behind the scenes at armies, intelligence agencies and large companies, not on consumer devices.

The backstory

Large companies and governments want to use AI on their own data, but that data sits in separate systems that general-purpose AI tools cannot work with directly. That is Palantir's opening, and U.S. companies are now its fastest-growing customers. Palantir links those systems into one model, runs AI on top under the customer's control, and grows small trials into large multi-year deals.

How the business makes money

Why Palantir's big contracts cost little extra to serve^1,3,4,23

Step 1
Governments and companies want AI on their own data, which sits in separate systems. Palantir links those into one model of their operations.
Step 2
Customers run AI on top, starting with trials Palantir pays for. Those grow into big deals: 212 worth over $1 million each last quarter.
Step 3
Signed deals keep paying out. U.S. commercial remaining deal value, the revenue still to be recognized, is up 79% from a year earlier.
Step 4
Each added customer costs little to serve, so Palantir kept about 62¢ of each $1 of sales after running costs, by its adjusted measure.
What shareholders get
That became $1.22B of spare cash last quarter. At about $75 per $1 of expected yearly earnings, the stock is betting on years more of fast growth.

Advantages

Software that runs daily operations

Major advantage

Palantir's biggest advantage. It ties data to day-to-day decisions, where Snowflake and Databricks mainly store and analyze it. Management says AIP beat a frontier AI lab's own team in one customer's test.^3,4,11,12

Built into U.S. defense

Strong advantage

Strong and long-term. The Army folded dozens of contracts into one agreement worth up to $10B over a decade. U.S. government revenue grew 96% last quarter.^10,23

Profitable at large scale

Strong advantage

Strong. Under standard accounting, after stock pay, Palantir kept 47% of revenue as operating profit. C3.ai, selling a similar pitch, still lost money.^13,23

What's changing

Revenue is booming; new contracts are not

Palantir raised its 2026 revenue forecast to about $8.53B from $8.15B, and U.S. companies passed the U.S. government as its biggest source of revenue. The stock still fell 1.65% the next day, to $175.40, after dropping about 8% before the market opened, as investors focused on contract growth of just 6%.^23,24,26,29

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with Palantir Technologies
Palantir Technologiesthis stock	$421.52B	Palantir's software pulls an organization's data into one model of its operations so people and AI can act on it. It runs trials at its own cost, then grows by selling more to each customer.
SnowflakeSNOW	$118.16B	A cloud warehouse where companies store and query data, billed by how much they use.	Snowflake stores and queries data; Palantir runs day-to-day operations on top of it.¹¹
Databricks (private)private	—	Sells a data and AI platform that engineers use to build their own tools.	Similar size and growth; Databricks sells to data teams, Palantir to front-line operators.¹²
C3.aiAI	$2.05B	Sells ready-made AI apps for industries like energy and defense, still losing money.	Same customers and pitch, but Palantir's revenue is many times larger.¹³
ChapsVision (private, France)private	—	French data-analysis software used by French and German intelligence agencies.	ChapsVision wins when European governments want a home-grown supplier; Palantir is American.⁹

Leadership

Who runs the company, and how the stock has done under the CEO.

PLTR 18xS&P 500 +144.2%Total return with dividends since listing in Sep 2020 · log scale

202120222023202420252026

Alex KarpFounder, Co-Founder and CEO21 yrs, since 2005

David GlazerCFO and Treasurer6.3 yrs, since 2020

Shyam SankarCTO and EVP3.7 yrs

Wall Street on Karp: PositiveGoldman Sachs upgraded the stock to Buy with a $230 price target, citing demand from governments building their own AI. Citi raised its price target to $245 after second-quarter revenue grew 93%.^L4,L5

Leadership sources (5) · researched Oct 2026

L1Palantir Technologies Inc. 2026 Proxy Statement (Form DEF 14A) · Palantir Technologies (SEC filing), 2026-04-23
L2Playlist Appoints David Glazer, Chief Financial Officer of Palantir Technologies, to Board of Directors · Playlist / PR Newswire, 2026-06-17
L3Palantir reports chief accounting officer resigns, other management changes · The Fly / TipRanks, 2023-02-03
L4Goldman Sachs Upgrades Palantir to Buy, Sees 18% Upside and Further Outperformance Into 2027 · 24/7 Wall St., 2026-10-09
L5Wall Street analysts update Palantir stock price target · Finbold, 2026-08-04

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will Palantir's revenue grow about 50% in 2027, to the roughly $13.0B analysts expect, so a stock priced at about 75 times expected earnings can hold its value?^{23,24,26,27,28,31,9,8}

Bull case: why buyers buy

If U.S. companies keep expanding, growth stays near 50% in 2027 and earnings rise fast enough to justify the price.

U.S. companies are now the biggest engine. Their revenue grew 148% to $984M, passing U.S. government revenue for the first time.
Management guided far above estimates. Fourth-quarter revenue guidance of about $2.65B compares with the $2.46B analysts expected.
Signed deals still have a long runway. U.S. commercial remaining deal value, the revenue left to recognize, rose 79% from a year earlier.
Analysts keep raising estimates. Yahoo Finance shows the 2027 earnings forecast rising from $2.30 to $2.46 a share in 90 days.

Bear case: why sellers sell

If new contracts keep lagging revenue, growth fades toward a normal software rate, and a stock at about 120 times past earnings has a long way to fall.

New contracts are slowing. Total contract value signed rose 6%, and the U.S. commercial part rose 11%, against revenue growth near 100%.
The stock is extremely expensive. It trades at about 120 times the past year's earnings.
Demand outside the U.S. is thin. The U.S. was about 84% of revenue, and French and German intelligence agencies chose French provider ChapsVision over Palantir.
The stock has crashed before. In 2022 it fell 64% from peak to low. The S&P 500 fell 24%.

Where Delphi landsbuyWe think the bull case is more likely than today's price assumes.See why

What to watch

The numbers that will settle the debate.

Total revenue growth▲ improving

Up 96% last quarter, with U.S. commercial up 148%; fourth-quarter guidance implies about 15% growth from the third quarter, down from 20%^23,26,27

Must stay near 50% in 2027 for the current price to hold.

U.S. commercial contract value signed▼ worsening

Up 11% to $1.46B last quarter, after a record $2.13B the quarter before^23,26,1

Signings feed future revenue, so they should grow roughly in line with sales.

Adjusted operating margin■ flat

62% last quarter; fourth-quarter guidance implies about 62%²³

Shows whether hiring and cloud costs eat into profit as growth continues.

Next earnings report

Feb 1

In 88 days

Earnings calls page ↗

Expected earnings per share: $0.47
Expected revenue: $2.64B

What to listen for: Whether contract value signed speeds back up toward revenue growth, and whether first 2027 guidance supports roughly 50% growth.^28,32

What would prove this wrong

✕Revenue growth in 2027 falls well below the 50% analysts expect.
✕U.S. commercial contract signings keep growing far slower than revenue for several more quarters.
✕More European governments replace Palantir with domestic software providers.
✕Adjusted operating margin falls below 55% as hiring and cloud costs rise.

Our ratingBuyLow convictionas of Nov 3 close, $175.40 · what ratings mean

Fourth-quarter guidance is far above estimates and earnings expected to rise about 45% next year should lift the price, though slowing contract growth could shrink the valuation.

12-month target: $229.40 (+30.8%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +12.3 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $175.40

Target $229.40

bull case25% likely

$303.61 +73%

U.S. commercial sales keep growing above 100% into 2027 and contract signings catch up, so revenue beats the $13.0B forecast and earnings land near the top of estimates.

$3.65 earnings per share × 83.3 = $303.61

base case50% likely

$222.20 +27%

Revenue grows about 50% in 2027 to roughly $13.0B with margin near 60%, and earnings match forecasts for the year to October 2028.

$3.38 earnings per share × 65.7 = $222.20

bear case25% likely

$169.58 -3%

Contract signings stay far below revenue growth and more European governments leave, so 2027 revenue falls short of $13.0B and earnings land in the lower half of estimates.

$3.03 earnings per share × 56 = $169.58

Why these odds: Yahoo shows 2027 earnings estimates up from $2.30 to $2.46 in 90 days and fourth-quarter guidance far above estimates, but contract value grew only 6%. 2028 extends 2027 by MarketScreener's 45% growth. No extra shares assumed; Palantir is profitable. History uses 21 readings since December 2021.

How the prices are built: Wall Street expects earnings per share of $3.38 for the year starting a year from now (analysts range from $2.68 to $3.91). Today the stock trades at 75.3 times next year's earnings per share; its five-year middle is 74.8. Because earnings per share is forecast to grow fast, valuations are cut 13%, since fast growth rarely keeps its price.^{23,28,29,30,31}

What tests the call: Q4 2026 earnings (est.) (Feb 1)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Nov 3; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $175.40, investors pay about 4.0 times what they pay for the average stock's earnings

Palantir Technologies trades at 75 times the earnings analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's earnings. That is above its five-year middle of 75.

Analysts expect earnings to grow about 45% the year after, against about 16% for the S&P 500. The S&P 500 trades at 19 times. To be priced like the average stock, Palantir Technologies would need to earn about 4.0 times what analysts expect over the next 12 months. The price is a bet on profits well beyond that.

Palantir Technologies multiple: 75×
S&P 500 multiple: 19×
Base case: +27%
Bear case: −3%

The skewOur bear case loses about 12¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

Q3 2026 results, reported Nov 2

Revenue grew 96% and U.S. commercial revenue passed U.S. government revenue for the first time, and Palantir raised its 2026 revenue forecast to about $8.53B.^{23,24,25,26,27,29}

Reported Nov 2	Expected	Actual	Difference
Earnings per share	$0.41	$0.44	+8.3%
Revenue	$2.18B	$2.31B	+6.3%

Stock reaction: -1.65% next day (November 3), to $175.40; down about 8% before the open

Why the stock moved

Up: revenue beat estimates by about $130M, and fourth-quarter guidance of about $2.65B was well above the $2.46B analysts expected.
Down: new contract value grew only 6%, and 11% in U.S. commercial, so signings lagged revenue growth near 100%.
Down: guidance implies about 15% growth from the third quarter, down from 20% in the third.
Context: commentators said a stock at this valuation leaves little room for slower momentum, so a beat was already expected.

What it means for the stock: Mixed. Revenue and guidance strengthened the case, but contract signings slowed sharply, which makes the 2027 growth question harder to answer.