Can Palantir's 'breathtaking' quarter win over Wall Street? It's complicated.

By Christine Ji

Palantir's AI offerings continue to drive revenue acceleration, but the stock's sky-high valuation is still giving analysts pause

Palantir CEO Alex Karp said the company delivered "arguably the best results that any software company has ever delivered."

Palantir Technologies Inc.'s third-quarter results were the best the company has ever posted. So why are shares down about 7% on Tuesday?

The artificial-intelligence software darling may be dealing with the weight of a 174% year-to-date stock rally through Monday's close, which many on Wall Street believe is difficult to reconcile with the company's fundamentals, even as Palantir's (PLTR) U.S. commercial business just grew revenue 121% relative to a year before.

The stellar performance and the stock's recent momentum have led analysts to increase their price targets, though 18 of 29 analysts tracked by FactSet still rate the stock the equivalent of hold. In a note Tuesday, Mizuho analyst Gregg Moskowitz called the results "stunning" and raised his price target on the stock to $205 from $165, but maintained his neutral rating.

"Another breathtaking quarter merits a [price-target] increase, although risk/reward is a big challenge," Moskowitz wrote. His $205 price target reflects a sales multiple of 86x for 2026 and 66x for 2027, which reflects "an extremely large 6.5x premium" to the median multiple of comparable high-growth software companies.

Read: Palantir's stock falls despite AI fueling another flurry of records

On Tuesday, D.A. Davidson analyst Gil Luria raised his price target to $215 from $170 while maintaining his neutral rating. Luria indicated that the stock's "unprecedented premium" remains the reason why he's staying on the sidelines, but he had no shortage of praise for the company.

Luria pointed out that Palantir achieved record total contract value bookings of $2.8 billion in the quarter, up 151% year-over-year, a development he said solidifies Palantir's dominance as a company successfully providing AI solutions. Luria also credited Palantir's new AI Forward Deployed Engineer (FDE) product as a driver of customer adoption.

"Customers are deploying Palantir's AI tools at scale. The commercial momentum we're seeing suggests this is no longer just a government contractor story," Jake Behan, head of capital markets at the investment firm Direxion, said in comments shared with MarketWatch.

Palantir has been a bright spot in the software sector, as its stock has been immune to the "AI eating software" headwind that's plagued other large names this year. "We believe Palantir is the best story in all of software," Luria wrote. "More important than the stock, we appreciate Palantir's mission and moral clarity."

Also boasting was Chief Executive Alex Karp.

"These are arguably the best results that any software company has ever delivered ... despite what your analyst friends may want you to believe, because they've been wrong at every price," he said during Monday's earnings call.

Read: Why Palantir is the 'exception' as other AI companies struggle to add value

-Christine Ji

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11-04-25 0933ET