In the fast-paced world of AI-driven tech stocks, Palantir Technologies (NYSE: PLTR) has made a powerful statement with its latest earnings report, sending shockwaves through Wall Street. On November 3, 2025, the data analytics giant revealed Q3 2025 results, showcasing an impressive 63% year-over-year revenue growth to $1.181 billion—well above analyst expectations.
However, despite the stellar numbers, Palantir’s stock experienced significant volatility in after-hours trading. It surged initially before losing momentum and dipping lower, as concerns about its valuation grew.
This dramatic response highlights a familiar scenario in the AI sector: explosive growth meets sky-high expectations, leaving investors torn between seeing Palantir as a pioneering force or an overhyped stock. As companies worldwide accelerate their AI adoption, Palantir’s platforms, such as Foundry and its Artificial Intelligence Platform (AIP), are at the forefront, supporting everything from national defence to supply chain optimisation. But with shares near all-time highs at around $205, questions about the sustainability of its growth persist.
In this comprehensive analysis of Palantir’s Q3 2025 earnings, we’ll delve into the financial results, examine the stock’s volatile reaction, explore valuation concerns, and offer a look ahead at what’s next for PLTR investors. If you’re seeking insights on “Palantir Q3 2025 earnings,” “PLTR stock reaction,” or “Palantir revenue growth,” you’re in the right place. Let’s break down this landmark quarter.
Palantir’s Q3 2025 Earnings: A Closer Look
Palantir’s Q3 performance wasn’t just strong—it was historic. CEO Alex Karp boldly called the results “arguably the best that any software company has ever delivered.” The numbers certainly support his confidence, with the company showing strong growth in both its commercial and government sectors. Here’s a breakdown of the key figures behind the 63% revenue surge:
Total Revenue: $1.181 Billion, Up 63% YoY
Palantir’s revenue for Q3 2025 reached $1.181 billion, far exceeding analysts’ expectations of around $1.09 billion. This marks the company’s fastest growth rate in years, driven by a combination of increased AI demand and strategic expansions. Sequentially, revenue also increased by 18% from Q2, indicating continued momentum.
Geographic Breakdown:
- U.S. Revenue: $883 million, a 77% year-over-year increase, highlighting Palantir’s dominance in the American market.
- International Revenue: $298 million, up 34% YoY, though slower AI adoption abroad contributed to the gap between domestic and international growth.
Segment Performance: Strong Growth Across the Board
Palantir’s dual-engine business model—commercial growth combined with strong government contracts—remains a key driver of its success.
Commercial Segment:
- Total: $548 million, a 73% YoY increase and a 22% sequential rise.
- U.S. Commercial: $397 million, exploding 121% YoY and 29% sequentially, reflecting rising demand for AIP across sectors like healthcare, finance, and manufacturing.
- International Commercial: $152 million, a modest 10% YoY increase, suggesting room for further global expansion.
Government Segment:
- Total: $633 million, up 55% YoY and 14% sequentially.
- U.S. Government: $486 million (+52% YoY), driven by increased defense contracts.
- International Government: $147 million (+66% YoY), bolstered by growth in Europe and Asia-Pacific.
The steady government revenue, combined with explosive commercial growth, has led to a record-high “Rule of 40” score of 114, up from 102 in Q2.
Comparables paint a stark picture:
| Company | Forward P/S | YoY Growth (Est.) | Rule of 40 Score |
|---|---|---|---|
| Palantir (PLTR) | 120x | 53% | 114 |
| Snowflake (SNOW) | 15x | 28% | 65 |
| Databricks (Private) | ~40x | 50% | N/A |
| Nvidia (NVDA) | 35x | 80% | N/A |
Palantir’s premium stems from its “boot-on-the-ground” AI deployment model, but risks abound: economic slowdowns could crimp commercial deals, and regulatory scrutiny on government ties adds headwinds. In short, valuation worries aren’t baseless—the stock’s swings reflect a market pricing in both Palantir’s AI dominance and the peril of overenthusiasm.
Profitability: Expanding Margins
Palantir’s profitability also showed strong results. Adjusted earnings per share (EPS) came in at $0.21, beating expectations by 23.5%. GAAP net income rose to $476 million, yielding a 40% margin. Chief Financial Officer Dave Glazer highlighted that adjusted operating margins reached a record 51%, with adjusted free cash flow of $540 million—vital for supporting R&D and funding advanced projects without diluting shareholders.
Why Did Palantir Stock Swing So Wildly After Earnings?
Palantir’s stock experienced a rollercoaster ride following its earnings report. It closed at $199.48 on November 3, 2025, before initially spiking as much as 5% in after-hours trading, reaching $209. However, the excitement quickly faded, and by the end of the session, PLTR was only up by 2.6%, eventually dipping 1.2% in early Monday trading to around $202.
Several factors contributed to this volatility:
- Expectation Overhang: Palantir’s stock had already surged 165% in 2025, with its valuation reflecting the expectation of flawless performance. Even the 63% revenue beat didn’t excite everyone, especially given the previous quarter’s 54% growth.
- Government Shutdown Fears: With concerns over potential delays in government contracts amid U.S. fiscal issues, investors grew wary, even though Q3 wasn’t impacted.
- Retail vs. Institutional Tug-of-War: Retail traders helped fuel the stock’s rise, while hedge funds, concerned about overvaluation, pulled back.
- Broader AI Fatigue: As peers like Nvidia and Snowflake show signs of slowing down, concerns about the sustainability of AI-driven growth spread, causing Palantir to feel like a proxy for the sector’s health.
Valuation Worries: Is Palantir’s 120x P/S Multiple Too High?
Palantir’s post-earnings dip can largely be attributed to concerns over its high valuation. At a share price of $205, Palantir has a market cap exceeding $450 billion, and its forward price-to-sales (P/S) multiple stands at around 120x, based on FY2025 guidance—much higher than most of its peers.
Analyst Opinions:
- Bearish: Analysts like Ahan Vashi from Seeking Alpha argue that the stock is overvalued, suggesting a fair value of $57—more than 70% lower than the current price. They warn that the multiple assumes continuous 40%+ growth and overlooks the threat of competition from open-source AI tools.
- Bullish: Supporters argue that Palantir’s proprietary technology and dominant position in both commercial and government sectors justify the premium. With expected revenue of $4.4 billion in 2025, even a 100x multiple could justify a $440 billion market cap.
What Powered Palantir’s 63% Revenue Surge?
Palantir’s revenue growth wasn’t accidental—it was the result of several key factors:
- Enterprise AI Adoption: AIP, launched in 2024, is seeing rapid adoption, particularly in the U.S. commercial sector, which grew 121% YoY.
- Government Contracts: Strong demand for Palantir’s services in defence and counterterrorism analytics, particularly from the U.S. DoD, contributed significantly to revenue.
- Product Innovation: Foundry’s evolution into an AI operating system, alongside the development of quantum-resistant features, sets Palantir apart from competitors.
Future Outlook and Investor Implications
Looking ahead, Palantir is optimistic, raising its Q4 revenue guidance to $1.327–$1.331 billion (+61% YoY). Full-year 2025 guidance has also been revised up to $4.396–$4.400 billion, a 53% increase from 2024.
However, risks remain. U.S. government shutdowns could impact Q4, and competition from platforms like AWS SageMaker is heating up. Despite these challenges, Palantir’s cash position of $3.5 billion and debt-free balance sheet provide ample flexibility for acquisitions or buybacks.
For investors, the Q3 results validate Palantir’s AI-driven vision but also highlight the risks tied to its high valuation. Bulls might look to buy on dips below $190, while bears could consider trimming positions near $210.
FAQ: Common Questions on Palantir’s Q3 2025 Earnings
What was Palantir’s Q3 2025 revenue, and how did it compare to expectations?
Palantir reported $1.181 billion in Q3 revenue, up 63% year-over-year (YoY), beating estimates by about 8%.
Why did Palantir stock swing after the earnings report?
Initial excitement drove a 5% spike, but valuation concerns and government shutdown fears led to a pullback, ending flat to down 1%.
Is Palantir overvalued at 120x forward P/S?
Many analysts say yes, citing bubble risks, though bulls argue its AI moat supports the premium.
What is Palantir’s FY2025 revenue guidance now?
$4.396–$4.400 billion, implying 53% growth, raised from 45% prior. (nasdaq.com)
How did Palantir’s commercial segment perform in Q3?
Commercial revenue hit $548 million (+73% YoY), with U.S. commercial up 121% to $397 million.
What risks could impact Palantir’s Q4 guidance?
Potential U.S. government shutdowns and intensifying AI competition pose key threats.
This article is for informational purposes only and is not investment advice. Always consult a financial advisor.
In conclusion, Palantir’s explosive growth has cemented its leadership in the AI space, but its high valuation means the road ahead will likely remain volatile.