Palantir Earnings: We Raise Fair Value Estimate as AI Growth Accelerates

Key Morningstar Metrics for Palantir

• Fair Value Estimate
  : $156
• Morningstar Rating
  : ★★★
• Morningstar Economic Moat Rating
  : Narrow
• Morningstar Uncertainty Rating
  : Very High

What We Thought of Palantir’s Earnings

Palantir PLTR 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 fell 3% after hours on Nov. 2, 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 upgrade our moat rating for Palantir to wide from narrow and transfer 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 after-hours dip.

• Palantir trades at about 65 times enterprise value/sales. Justifying these prices at a 10% return requires annual revenue growth of 40%-45% over the next five years. We see this as achievable, but would like to see a lower entry point to justify the risk/reward.
• Our wide moat rating is supported by switching costs and intangible assets, reflecting the deeply embedded nature of Palantir’s solutions in customer operations, data innovation flywheel, and operational know-how that support its high return on investment and offering quality.