Palantir Technologies Inc (NYSE:PLTR) has once again outpaced expectations, cementing its place as one of the dominant forces in artificial intelligence - though the shares didn't relfect this as valuation concerns led to an afer-hours sell-off.
The shares fell 7.3%, wiping over $30 billion off the tech giant's valuation.
Still, there were still some fans out there for a story of exponential growth that hs underpinned a 400% rise in the stock over the past year.
Among the cheerleaders is Wedbush Securities, which calls Palantir the “Messi of AI”, posted another strong quarter and prompted the broker to lift its 12-month price target from $200 to $230, while keeping an 'outperform' rating.
The broker-dealer's call followed a strong third-quarter showing with revenue up 63% year on year to $1.18 billion, comfortably ahead of Wall Street’s $1.09 billion forecast and the company’s own guidance.
Operating income margins reached a record 50.8%, beating analyst estimates of 45.9%. Free cash flow of $540 million also topped expectations by more than $70 million.
The standout was Palantir’s US commercial business, where revenue grew 121% to $397 million. Total contract value in the division rose 342% to $1.31 billion, while remaining deal value climbed 199% to $3.63 billion.
The company closed 204 contracts worth over $1 million, up from 157 in the previous quarter, including 53 deals above $10 million.
“This was a major validation moment for Palantir about AI demand and the growth trajectory over the next few years,” said Daniel Ives, lead analyst at Wedbush.
Government contracts remain a vital growth engine. US federal revenue increased 52% to $486 million as Palantir secured new nine-figure defence and intelligence deals.
Wedbush expects further momentum as public-sector clients ramp up spending on data-driven systems.
Much of the excitement surrounds Palantir’s artificial intelligence platform, or AIP, which now sits at the centre of its strategy. Wedbush said demand from enterprises to “undergo complete AI transformations” continues to accelerate, helped by shorter sales cycles and a growing pipeline.
Total customer numbers rose 45% to 911, and the firm’s “land and expand” model continues to deliver larger seven- and eight-figure accounts as clients broaden their use of the software.
For the current quarter, Palantir guided for revenue between $1.327 billion and $1.331 billion, roughly $150 million above consensus, with operating income of about $697 million versus Wall Street’s $578 million.
For the full year, adjusted free cash flow is expected to reach between $1.9 billion and $2.1 billion, up from earlier guidance of $1.8 billion to $2.0 billion.
Wedbush describes Palantir as one of the core companies of the coming AI decade. Its “Rule of 40” score, which measures growth and profitability, stands at an impressive 114%. Ives argued that any short-term pullback in the shares should be seen as a buying opportunity.
The stock has risen more than 400% in the past year, closing at $207.18 before the results. Wedbush’s valuation assumes Palantir maintains its dominance in US commercial data analytics and continues to win government work.
“If investors think this is as good as it gets, they’re mistaken,” Ives said. “Palantir’s AI story is still in its early chapters.”