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Palantir’s best numbers yet run into the law of high expectations
Ruben Dalfovo
Investment Strategist
Key takeaways
Strong quarter: revenue up 63% with strong profit margins and guidance raised.
Valuation reaction: shares eased after-hours as rich multiples capped the move.
Nvidia partnership and ready-to-use AI platform help customers get results faster, so deals close sooner and switching away becomes harder.
Investors love growth until the bill arrives. Palantir posted its strongest quarter to date, lifted guidance, and touted record deal flow. Yet the share price reaction was muted because valuation already sits on the summit. That is the core tension in this story, and it will shape returns from here.
The print in one glance
Palantir beat Bloomberg consensus on revenue, earning per share (EPS), and guidance. Revenue was USD 1.18 billion, up 63% year on year, with a net income margin of about 40% and adjusted EPS of USD 0.21. Management raised full-year revenue guidance to USD 4.396–4.400 billion and lifted operating income expectations.
US government revenue was USD 486 million, up 52% year on year. US commercial sales reached USD 397 million, more than doubling vs last year. That mix shift matters. Palantir was seen as government-first. A larger commercial base reduces exposure to procurement cycles and opens a much wider market opportunity.
Palantir closed a record USD 2.76 billion in total contract value (TCV), a forward signal for future revenue. Geography is a swing factor too. Management called Europe stagnant, any re-acceleration abroad would reduce concentration risk in the U.S. footprint. The shares closed on 3 November 2025 at USD 207.18, up 3.4%, then fell almost 6% later in extended trading. Elevated valuation framed that after-hours drift.
What the numbers say
Palantir’s Artificial Intelligence Platform (AIP) remains the entry point for new commercial wins, with Gotham and Foundry providing the data backbone. The Rule of Forty, which adds year-on-year revenue growth to adjusted operating margin, came in above 100% this quarter, well above of the 40% healthy bar. That signals growth with profit discipline: not just more revenue, but more cash-generating revenue.
Guidance suggests momentum carries into next quarter. Management pointed to strong pipeline conversion and repeat purchases across pilots that moved into production. That is the difference between AI demos and AI value.
Why this matters for investors
AI is not a product, it is a spend cycle. Palantir sits where messy enterprise data meets day-to-day operational decisions in defence, healthcare and industry. If contract wins keep compounding, revenue durability improves and cash flow scales. The portfolio question is how much of that future is already in the price.
Valuation is the brake. After a powerful run this year, the price-to-sales ratio sits in the mid-80s and the forward price-to-earnings (P/E) multiple is above 200. That is rare territory in the S&P 500. At those levels, even strong quarters can meet cool receptions.
What is driving the flywheel
Palantir’s engine starts with commercial land-and-expand. Small “bootcamp” deployments prove value, then grow into wider rollouts. Shorter sales cycles and repeatable, template use-cases keep customer acquisition costs in check and make revenue stickier over time.
Government remains the stabiliser. Federal and allied frameworks provide long-dated visibility and fewer procurement hurdles. The new U.S. Army enterprise agreement, up to USD 10 billion over ten years, is a ceiling not a promise, but it shows strategic positioning and room to scale as missions evolve.
Two dynamics connect cause to effect. First, AI adoption is shifting from trials to daily workflows. As pilots convert, licences, consumption and services expand, lifting average contract values and customer stickiness. Second, the sales motion is becoming more product-led. Pre-packaged AIP use-cases cut time to value and push up the velocity of new TCV.
Partnerships are a lever too. The Nvidia tie up signals deeper participation across the compute to software stack. Pairing high-performance chips with Palantir’s data platforms shortens time to value, speeds deployment, and raises switching costs as customers standardise on joint blueprints. It also anchors multi-year workload commitments across both infrastructure and applications.
Risks and early warning signs
Valuation risk. With premium multiples, small disappointments bite. Early signs: slowing U.S. commercial growth below 80–90% year on year, or TCV below USD 2 billion in a quarter.
Contract timing and politics. Government revenue can slip on approvals or budgeting cycles. Early signs: delayed task orders or push-outs on large programmes.
Competition and substitution. Hyperscalers and data-platform rivals are bundling AI tools. Early signs: bigger discounts from cloud vendors, longer procurement cycles, or rising churn in mid-market customers.
International drag. If Europe stays weak, mix skews to the U.S. and concentration risk rises. Early signs: flat ex-U.S. customer adds for multiple quarters.
Investor playbook
Track conversion, not just contracts. Follow quarterly TCV, the split of deals above USD 5 million and USD 10 million, and how quickly bookings turn to revenue. Trigger: sequential TCV above USD 2 billion with rising large-deal counts.
Watch U.S. commercial momentum. This is the profit lever. Trigger: growth staying above 100% year on year with improving operating margin and stable average selling prices.
Map government drawdowns. Framework wins are ceilings. The signal is task-order volume and delivery milestones. Trigger: disclosed call-offs against the Army agreement and allied contracts.
Let margins tell the truth. A sustained Rule of Forty above 60% suggests profitable scale. Trigger: adjusted operating margin rising alongside revenue growth, not instead of it.
Price versus promise
Palantir delivered a standout quarter and lifted guidance again. The shares did not sprint because a lot of that success is already in the price. That is the thread from start to finish. The market is paying today for tomorrow’s execution.
To move higher, Palantir must keep turning record total contract value into live deployments, keep U.S. commercial growth brisk without heavy discounting, and let margins and cash flow climb together. The Rule of Forty staying strong helps. So does steadier growth outside the United States to reduce concentration risk.
This is not a call on whether the products work. It is a call on pace and discipline at a premium valuation. Expectations are the main variable now. If conversions remain fast, operating income scales, and guidance continues to rise, the gap between price and fundamentals can close from the right side. If any of those wobble, gravity shows up quickly.
The takeaway is simple and unchanged from the opening: in a market that rewards promises, Palantir’s returns from here depend on how much of those promises are already priced in, and how quickly fundamentals catch up.
This material is marketing content and should not be regarded as investment advice. Trading financial instruments carries risks and historic performance is not a guarantee of future results.
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The instrument(s) referenced in this content may be issued by a partner, from whom Saxo receives promotional fees, payment or retrocessions. While Saxo may receive compensation from these partnerships, all content is created with the aim of providing clients with valuable information and options.
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