Palantir Q3 Beats Expectations But Stock Slides on Booking Slowdown

Key points

• Palantir's Q3 revenue reached $2.31 billion, exceeding the $2.18 billion estimate, with net income doubling to $1.13 billion.
• U.S. commercial revenue jumped 148% year-over-year to $984 million, surpassing U.S. government revenue of $953 million for the first time.
• The company raised full-year adjusted operating profit guidance by $354 million to $5.247 billion and free cash flow guidance by $300 million to $4.9 billion.
• Shares dropped 6.9% pre-market on November 3, despite the strong earnings, amid a broader AI stock selloff.
• Analysts noted a slowdown in U.S. commercial bookings, which grew only 11% compared to 153% in the previous quarter.

Background

Palantir had recently hit an all-time high of $208.88 in October 2026, driven by bullish upgrades from Goldman Sachs and Barclays. However, the stock faced a sharp correction in mid-October, losing $34 billion in value as part of a broader software sector rout that wiped $260 billion in market value. This latest pre-market decline follows a period of high valuation expectations and sector-wide volatility.

How outlets are covering it

D.A. Davidson analyst Gil Luria and Yorkville Ives partner Dan Ives defended the stock, calling Palantir the best story in software and highlighting its accelerating growth and free cash flow. Conversely, Seeking Alpha reported that the pre-market slide was attributed to a slowdown in U.S. commercial bookings, with some analysts arguing the current valuation offers insufficient margin of safety for new buyers. CNBC emphasized the milestone of commercial revenue surpassing government revenue, while noting CEO Alex Karp's calls for nationalizing AI labs.

Why it matters

The divergence between strong financial results and stock price decline highlights market sensitivity to growth deceleration in AI-driven sectors. Palantir's shift from government to commercial dominance signals a broader adoption of AI tools in the private sector, but the booking slowdown raises questions about the sustainability of its rapid expansion.

What to watch

Investors will watch for continued momentum in U.S. commercial bookings and whether Palantir can maintain its growth trajectory into 2027, which analysts view as an inflection year for AI monetization. The company's full-year revenue projection of $8.53 billion will be a key benchmark for future performance.