Palantir shares slide despite strong third-quarter earnings

Palantir Technologies saw its stock price decline in after-hours trading on Nov. 2 and continued to fall in pre-market trading on Nov. 3, 2026, despite reporting financial results that surpassed Wall Street expectations for the third quarter.

The company reported revenue of $2.313 billion for the quarter, marking a 96% increase compared to the same period last year and exceeding the consensus estimate of approximately $2.18 billion. Adjusted earnings per share reached $0.44, beating the anticipated $0.41. Additionally, Palantir raised its full-year 2026 revenue guidance to a range between $8.530 billion and $8.534 billion.

A primary point of concern for analysts was the deceleration in U.S. commercial total contract value. While U.S. commercial revenue grew 148% year-over-year to $984 million, the total contract value grew by only 11%. Analysts at William Blair noted that this growth rate was the lowest since 2023 and significantly trailed the 153% growth reported in the second quarter of 2026.

CEO Alex Karp highlighted that the commercial business surpassed the government business for the first time in the company's history, describing the U.S. commercial segment as a juggernaut. However, market observers suggested the stock's valuation, which carried a forward price-to-earnings ratio of approximately 97x, left little room for error.

Ryan Lee, senior vice president of product and strategy at Direxion, noted that Palantir appeared to be priced to perfection, leading investors to use the earnings beat as an opportunity to secure profits. The decline reflects broader investor caution regarding high-valuation artificial intelligence stocks and concerns over the pace of new contract signings.