Palantir Q3 2025 Earnings Preview

Palantir (PLTR) delivered a robust quarterly performance, exceeding analyst expectations and issuing optimistic guidance for the fourth quarter. The data analytics firm attributes its strong results to the growing adoption of its artificial intelligence platform (AIP). Shares saw a moderate after-hours bump of approximately 1% following the announcement.

Key metrics from the report include:

Earnings per share: 21 cents adjusted, surpassing the consensus estimate of 17 cents.

Revenues: $1.18 billion, exceeding the anticipated $1.09 billion.

Palantir anticipates Q4 revenue of approximately $1.33 billion, significantly above the LSEG consensus of $1.19 billion. This positive outlook arrives amidst ongoing discussions regarding the potential impact of government budgetary constraints on key contracts.

The company’s U.S. government sector experienced substantial growth, with revenue increasing by 52% year-over-year to $486 million. Palantir’s ongoing success has been underpinned by its ability to secure significant governmental contracts, notably a multi-billion dollar agreement with the U.S. Army. This has positioned them as a formidable competitor to more established government contractors. However, the nature of some of these government contracts and the use of Palantir’s tools have drawn criticism.

Overall revenue for the quarter surged by 63% to $1.18 billion, compared to $725.5 million in the same period last year. Net income more than tripled, reaching $475.6 million (18 cents per share) from $143.5 million (6 cents per share) a year prior. These figures mark the second consecutive quarter where revenue has surpassed the $1 billion mark, solidifying Palantir’s growth trajectory.

Looking ahead, Palantir projects full-year revenue of approximately $4.4 billion, exceeding the Wall Street estimate of $4.17 billion. The company has also increased its full-year free cash flow forecast to a range of $1.9 billion to $2.1 billion. This upward revision highlights the company’s operational efficiency, pointing to tighter cost control and improved cash conversion cycles. However, some analysts remain cautious, citing concerns over the sustainability of this growth rate and the intensifying competition in the AI-driven data analytics space.

Palantir’s U.S. commercial revenue witnessed explosive growth, more than doubling YoY to $397 million. Total contract value (TCV) for new U.S. commercial deals closed more than quadrupled to $1.31 billion. This commercial expansion appears to be fueled by partnerships with industry leaders like Snowflake, Lumen, and Nvidia, suggesting a strategic focus on integrated solutions and expanding the reach of their AIP platform.

Retail investor enthusiasm has contributed significantly to Palantir’s impressive stock performance. The shares have appreciated by over 170% year-to-date, driving the company’s market capitalization well past $490 billion and solidifying its position among the world’s leading technology firms. This heightened retail interest, however, has also fueled volatility and presented risks related to investor sentiment.

Some analysts have expressed reservations regarding the stock’s valuation, arguing that it trades at a premium compared to other tech giants with substantially higher revenue streams. CEO Alex Karp addressed these concerns in a shareholder letter, dismissing “detractors” and asserting that Palantir is unlocking investment opportunities previously exclusive to venture capitalists. However, the challenge for Palantir will be to demonstrate continued and sustained growth in order to justify its valuation.

In a recent CNBC interview, Karp acknowledged potential risks within the broader AI market, conceding that overvaluation exists and some companies will inevitably struggle. “The strong companies are going to get much stronger, and the people pretending they’re doing stuff are going to disappear very quickly,” Karp stated. This underlines the importance of focusing on tangible execution and market differentiation within the rapidly evolving AI landscape.