Palantir Stock Falls Amid Valuation Concerns Despite Record Revenue Growth

Palantir Technologies reported strong third-quarter earnings, surpassing Wall Street expectations with revenue of $1.18 billion and net income of $475.6 million, driven by accelerated AI adoption and government contracts including a major deal with the U.S. Army. The company raised its full-year revenue guidance to $4.4 billion and forecasted fourth-quarter revenue above analyst estimates despite concerns about the ongoing U.S. government shutdown. However, despite these solid results and upbeat outlook, Palantir's stock fell over 6% in premarket trading as analysts questioned whether its high valuation, trading at a forward PE ratio substantially above major tech peers, is justified given the fundamentals. Some analysts warned that the stock's risk/reward profile is unfavorable due to its steep valuation vulnerable to any downturn in the AI hype cycle. While Palantir continues to grow rapidly in both U.S. commercial and government sectors, skepticism remains among investors about whether this growth can sustain its current lofty market value. The company faces additional scrutiny due to its controversial contracts with the Israeli military and ICE, which have sparked public backlash.