Palantir Earnings Review: Raising Fair Value Estimate on AI Software Leader’s Stellar Quarter

Palantir Technologies released its third-quarter earnings report on Nov. 2. Here’s Morningstar’s take on Palantir’s earnings and stock.

Key Morningstar Metrics for Palantir Technologies

• Fair Value Estimate: $156.00
• Morningstar Rating: ★★★
• Morningstar Economic Moat Rating: Wide
• Morningstar Uncertainty Rating: Very High

What We Thought of Palantir Technologies’ Q3 Earnings

Palantir posted another stellar quarter, with sales of $2.3 billion, up 96% year over year, driven by US commercial growth of 148% to $984 million, beating US government sales of $953 million for the first time. The firm also raised its 2026 sales outlook by nearly 500 basis points to $8.53 billion.

Why it matters: Palantir remains a key beneficiary of the ongoing artificial intelligence wave, and demand for greater control over data and AI deployments continues to drive growth. Still, investors appear unimpressed. Shares slipped 2% after the report, reinforcing the view that they’re priced for perfection.

• Palantir’s sovereign AI sales were a key growth contributor this quarter, though shorter, smaller, early contracts slowed total contract value growth. TCV additions can be lumpy, and alongside Palantir’s healthy land-and-expand model, we think it shouldn’t be read as a sign of weakness.
• Tougher comparisons should normalize US commercial growth to 59% in 2027 (2026: 145%). We view contract expansions as the primary revenue growth driver, but expect near-term customer additions to be elevated, given growing AI demand and a small installed base.

The bottom line: We upgraded our moat rating for Palantir to wide from narrow and have transferred coverage. Our fair value estimate of $156, up from $153, reflects greater confidence in the firm’s long-term competitive positioning and growth. Shares look fairly valued following the post-earnings dip.

The following are excerpts from Morningstar’s company report on Palantir Technologies.

Fair Value Estimate for Palantir Technologies

With its 3-star rating, we believe Palantir stock is fairly valued compared with our long-term fair value estimate of $156 per share. We model a five-year (10-year) compound total annual revenue growth rate of approximately 47% (34%), driven by 54% (39%) growth in the commercial segment and 40% (29%) growth in the government segment. We view contract expansion as the primary growth driver for Palantir.

We view Palantir as a high-quality player set to thrive, not just survive in the AI era. Despite these bullish expectations, we caution that broader AI enthusiasm, coupled with a high concentration of retail investors, can drive significant price volatility relative to our intrinsic valuation.

Read more about Palantir Technologies’ fair value estimate.

Economic Moat Rating

We assign Palantir a wide moat based on switching costs and intangible assets. Palantir’s competitive advantage lies in owning the applications, workflows, and automations that accumulate around its platforms. Palantir’s deep entrenchment in its customers’ operations and the high return on investment on its solutions position the firm well to remain a leading software vendor and earn excess returns on invested capital over the next two decades.

Read more about Palantir Technologies’ economic moat.

Financial Strength

Palantir holds a solid financial position, evidenced by a sound balance sheet and growing revenue and profitability. As of 2025, Palantir has cash and cash equivalents of $1.1 billion and $7.6 billion in marketable securities, alongside no debt.

Over the past three years, the firm’s revenue has compounded at an average growth rate of 33%, alongside exuberant growth in profitability. We anticipate growth in the firm’s revenue and profitability metrics to remain elevated in the coming years, and expect the firm to continue to benefit from high product stickiness and growing deal sizes and operating leverage over the long term.

Read more about Palantir Technologies’ financial strength.

Risk and Uncertainty

We assign Palantir a Very High Uncertainty Rating. As of 2026, a significant portion of the firm’s revenue is attributable to its largest customers, implying customer concentration risk. Palantir also has several large contracts with the US government, which are sensitive to budgetary constraints, political and public scrutiny, as well as abrupt termination. Palantir’s entrenchment across multiple agencies should cushion it against shifts in White House leadership, but that resilience has not yet been tested over multiple political cycles.

Read more about Palantir Technologies’ risk and uncertainty.

PLTR Bulls Say

• Palantir is a premier AI software company poised to benefit from growing demand for digitization and automation, and has successfully made itself a valuable part of the AI value chain.
• Palantir’s decade-plus head start has let it fine-tune its ontological framework and AI orchestration across multiple deployment cycles in high-stakes environments, enabling it to build technical depth and a reputation that aren’t easy to replicate.
• Palantir is well-positioned to capture a sizable share of the software budget allocated to the US’ multibillion-dollar Golden Dome project.

PLTR Bears Say

• Faster, cheaper AI inference will lower technical barriers to entry to building decision-making software, which could increase competition from Big Tech, frontier labs, as well as in-house IT teams.
• Palantir’s lofty valuations imply that the stock is often priced for perfection; any growth or narrative derailments could trigger sharp selloffs.
• Nearly 50% of Palantir’s shareholder voting power is controlled by Palantir’s upper management, implying that minority investors have severely limited control over future governance and corporate decisions.

This article was compiled by Colin Laidley.