Palantir Technologies (NASDAQ:PLTR) shares fell more than 6% in premarket trading on Tuesday, even after the data analytics and defense software company reported another record-breaking quarter with results exceeding Wall Street estimates.
The Denver-based firm posted net profit of $475.6 million on $1.18 billion in third-quarter revenue, both topping expectations.
In a letter accompanying the results, CEO Alex Karp said the company is “now producing more profit in a single quarter than it did in revenue not long ago.”
Palantir also issued a strong outlook for the current quarter, citing surging AI-driven demand for its data analytics tools. The company has recently expanded its presence in the public sector, securing around $500 million in new U.S. government contracts, including major deals with the Internal Revenue Service and the State Department. Reports have also noted Palantir’s close relationship with the Trump administration.
Shares of the company have soared over 175% so far this year, making Palantir a symbol of the high valuations fueled by the AI investment boom. Reflecting concerns about overheated markets, shares of several large tech firms in Frankfurt with heavy AI spending plans also traded lower following Palantir’s update.
With the company’s market capitalization nearing $491.3 billion, some analysts have voiced concerns about its lofty valuation.
In a note to clients, Jefferies analysts said Palantir’s numbers are “great” but its “valuation is extreme.”
“We are fundamental fans and the numbers speak for themselves, but we believe the risk/reward at 83x [estimated calendar year 2026 revenues] is unfavorable and prefer to own AI in other ways,” the analysts wrote.
Others, however, remain bullish. Morgan Stanley analysts including Sanjit Singh and Keith Weiss said Palantir’s momentum has not “shown any signs of abating,” highlighting the firm’s guidance for its fastest-ever sequential revenue growth despite an ongoing U.S. government shutdown.
“It is hard to find a better fundamental story in software than Palantir,” they added. “When assessing Q3 results, it is actually difficult to choose which key performance indicator is most impressive.”
During a call with investors, Karp responded to skepticism by dismissing critics as “high-trained” elites.
“What I see in these numbers, and what I think we see in these numbers is, to put it slightly over the top, yeah, we were right, you were wrong, and we are going to go very, very deep on our rightness because it is exceedingly good for America,” Karp said.