Palantir's Stock Price Dropped by 6%, But Its Revenue Hit a Record High.

Palantir shares fell more than 6% in after-hours trading on Tuesday. Despite achieving record revenue for a quarter, the Palantir found itself in this predicament as a data analytics giant.

The company, which also offers software solutions for the defense sector, reported third-quarter sales of $1.18 billion and a net profit of $475.6 million. Both figures exceeded expectations.

CEO Alex Karp shared in a published letter that the company “generated more profit in a quarter than it ever had before.” The Denver-based company indicated that it expects sales to surpass estimates for the current quarter due to a surge in artificial intelligence (AI) adoption. They also secured increasing government contracts, including $500 million agreements with the Internal Revenue Service and the Department of State.

Palantir has gained over 175% this year, reflecting the high valuations created by market enthusiasm for artificial intelligence. However, some analysts pointed out that Palantir's market capitalization of $491.3 billion is high.

Analysts noted in a note written by Jefferies that while Palantir's figures are “fantastic,” the “valuation is excessive.” They stated, “We admire the fundamentals and the numbers speak for themselves, but we find the 83 times risk/reward ratio in 2026 revenue forecasts unfavorable and prefer to own AI through other means.”

On the other hand, Palantir's direction is supported by some analysts. Morgan Stanley analysts Sanjit Singh and Keith Weiss emphasized that Palantir's momentum showed “no signs of slowing down.” They pointed to the rapidly occurring guidance of revenue growth.

Karp expressed in a call with investors that concerns came from “highly educated” elites. “What I see in these numbers, and what they tell us, simply stated, is yes, we were right, you were wrong, and we must deeply question our correctness because this is extremely good for America.”