Palantir Shares Fall After Record Run-Up Despite Sales Surge

(Bloomberg) — Palantir Technologies Inc. raised its annual revenue outlook to $4.4 billion and outpaced analyst estimates for third-quarter sales, though the shares declined in after-hours trading on concerns about the company’s lofty valuation after a record run-up.

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Palantir shares fell about 3% in extended trading after earlier gaining as much as 7% following the report. Investors have sent the shares up more than 150% so far this year, closing Monday at a record $207.18. The company had a price-to-sales ratio of 85 as of Friday — the highest in the S&P 500 Index.

“All these numbers are completely disengaged from fundamentals,” D.A. Davidson’s Gil Luria said in an interview with Bloomberg Television. “This is a company with a $4 billion run rate that’s growing 63%. There’s nothing even remotely close to that, which is how we got to the situation where the valuation is at unprecedented levels.”

Mandeep Singh, senior analyst at Bloomberg Intelligence, said that investors likely wanted more guidance about the following year. Palantir gave a forecast for the current quarter, Singh said, but “I think everyone wanted some sense of 2026.”

Revenue increased 63% to $1.18 billion in the period ended in September, the company said Monday in a statement. Analysts, on average, estimated $1.09 billion. In the current quarter, sales will be about $1.33 billion, compared with an average projection of $1.19 billion.

Palantir has reported revenue above analyst estimates for 21 consecutive quarters, according to data compiled by Bloomberg.

“We are in a nosebleed zone,” Palantir Chief Executive Officer Alex Karp said in an interview Monday. “No one else is here.”

Profit, excluding some items, was 21 cents a share, compared with analysts’ average estimate of 17 cents.

The company’s growth has been particularly strong in the US — where it gets a majority of its revenue — but has lagged overseas. On a call with investors, Karp said “growth is being held down by a stagnant Europe, which is still a significant part of our business.”

Palantir’s quarterly sales to commercial customers in the US increased 121% from the period a year earlier to generate $397 million. Palantir’s government work in the US increased 52% in the third quarter to $486 million.

In recent years, Palantir has been one of the biggest public beneficiaries of the artificial intelligence boom. The company sells its AI software to both governments and companies, and has become a key provider to the US and its allies.

Founded in 2003 with backing from Peter Thiel and the venture arm of the CIA, Palantir’s software organizes information from disparate data sources and prompts customers to make better decisions, using AI tools to make those calls more quickly. In corporate settings, this can mean finding ways to save money. On the battlefield this can mean shortening the time from identifying a threat to neutralizing it.

Since its market debut via a direct listing in 2020, Karp has built a dedicated following among retail investors who affectionately call him “Daddy Karp” on Reddit. At the same time, he has antagonized Wall Street and dismissed calls to reverse Palantir’s strong support for Israel and for US border enforcement.

In a characteristically bombastic letter to investors, Karp said that the company’s ascent to its $488 billion valuation “has confounded most financial analysts and the chattering class, whose frames of reference did not quite anticipate a company of this size and scale growing at such a ferocious and unrelenting rate.”

Sounding a patriotic note, Karp also extolled the virtues of the US. In the investor letter, he quoted the poet William Butler Yeats, writing, “things fall apart; the center cannot hold.” Adding, “Today, America is the center, and it must hold.”

In addition to working on US defense projects, Palantir also has deals with US allies, including most recently Poland. The company is planning to work with the country on cybersecurity and AI.

Although the shares dipped in after-hours trading Karp was ebullient on the call with investors. “By any normal or even reasonable standard, these are not normal results. These are not even strong results,” he said. “These are arguably the best results that any software company has ever delivered.”

(Updates with share movement starting in the first paragraph.)

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