Last week, Palantir Technologies (NASDAQ:PLTR) released Q3 earnings that stunned Wall Street, delivering what Wedbush analyst Dan Ives called “eye-popping growth.” Despite exceeding expectations, Palantir stock dropped sharply, fueling fears of an AI bubble and investor jitters in tech. However, Ives remains bullish, forecasting another 8% to 10% climb in tech stocks through year-end as AI adoption accelerates.
The market’s mixed reaction underscores the tension gripping tech investors. Palantir’s booming U.S. commercial segment has drawn comparisons to early-stage giants like Salesforce (NYSE:CRM) and Amazon (NASDAQ:AMZN) Web Services. Ives even called Palantir “the Messi of AI,” projecting a $1 trillion valuation within three years—a potential 120% upside from its $460 billion market cap.
Is Palantir Stock a Buy Now?
Palantir’s Q3 results reveal a company firing on all cylinders. CEO Alex Karp delivered a confident defense of the company’s valuation, highlighting a Rule of 40 score of 114%—its highest ever. This metric, which combines revenue growth and profit margins, showcases Palantir’s exceptional performance within enterprise software.
A key driver of Palantir stock growth is its Artificial Intelligence Platform (AIP), which has accelerated adoption among commercial clients. In one example, a medical device manufacturer expanded its contract eightfold just five months after signing, demonstrating the fast pace at which companies are scaling AI initiatives.
Palantir’s Forward Deployed Engineers work directly with clients to solve high-value problems using the Ontology framework. This hands-on approach aligns the company’s success with customer value rather than relying on traditional large sales teams. Karp emphasized that this strategy contributed to 77% overall growth, achieved with a shrinking sales force.
U.S. Commercial Business Drives Growth
The U.S. commercial segment more than doubled year-over-year, reaching $1.3 billion in total contract value, a sixfold increase on a dollar-weighted basis. Palantir now serves 530 U.S. commercial clients, up 65% YoY, and closed 83 deals over $1 million in Q3 alone. Government revenue also surged, with the U.S. Army consolidating all data operations onto Palantir’s Vantage platform, driving a 52% increase in this segment.
The company’s technology investments, including AI-powered developer tools, are boosting productivity by allowing small engineering teams to accomplish work that traditionally required large consulting groups over years. Palantir posted a 51% operating margin and surpassed $2 billion in free cash flow for the first time. Full-year revenue guidance has been raised to $4.4 billion, with U.S. commercial growth forecast at 104%.
PLTR Stock Price Outlook
Analysts project Palantir’s revenue to grow from $2.87 billion in 2024 to $15.62 billion by 2029, while free cash flow could expand from $1.25 billion to $7 billion. Even if priced at 100x forward FCF, PLTR stock could gain 52% over the next three years.
Out of 21 analysts covering the stock, four recommend “Strong Buy,” 14 suggest “Hold,” one advises “Moderate Sell,” and two recommend “Strong Sell.” The average price target of $192.67 is nearly identical to current trading levels, reflecting market caution despite the company’s remarkable growth story.
Conclusion
For investors considering Palantir stock, the Q3 results demonstrate strong AI-driven growth, expanding commercial success, and industry-leading profitability. While the stock has experienced volatility, analysts see significant potential upside as the AI revolution continues.
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