$PLTR (-1,84%)
Revenue growth accelerates to 96%, but the sharp decline in new contract volume raises questions about the 2027 pipeline
⠀
The key takeaway: The quarter was exceptionally strong in terms of revenue, margins, and cash flow. The problem lies with bookings. Palantir is nearly doubling its revenue, while total contract value is growing by only 6%. It is precisely this gap between current growth and future deal dynamics that is concerning the market.
⠀
Average price target: $232
Potential from the current price of $168.41: ~38%
⠀
Current analyst estimates:
• Rosenblatt: Buy, $260 (unchanged) (+54%)
• Baird: Outperform, $250 (unchanged) (+48%)
• Truist: Buy, $250 (up from $233) (+48%)
• UBS: Buy, $250 (unchanged) (+48%)
• Mizuho: Outperform, $245 (unchanged) (+45%)
• Goldman Sachs: Buy, $235 (unchanged) (+40%)
• Piper Sandler: Overweight, $235 from $231 (+40%)
• Morgan Stanley: Equalweight, $233 from $205 (+38%)
• RBC: Underperform, $130 from $90 (-23%)
⠀
What stood out as exceptionally strong:
• Revenue of $2.31 billion, +96% YoY vs. ~$2.18 billion expected
• Adjusted EPS of $0.44 vs. $0.41 consensus
• U.S. Commercial revenue +148% YoY to $984 million
• U.S. Government revenue up 96% to $953 million
• U.S. Commercial surpasses U.S. Government for the first time in company history
• Adjusted operating margin reached 61.7%
• Free cash flow was approximately $1.2 billion, more than 50% of revenue
• FY26 revenue guidance raised to approximately $8.53 billion, representing about 91% growth
⠀
Why the stock is still falling:
• Total Contract Value grew only 6% year-over-year vs. 49% in Q2
• U.S. Commercial TCV up only 11% vs. 153% in the prior quarter
• Growth in remaining deal value slowed significantly
• RPO remained roughly unchanged sequentially
• Customer growth also slowed
• With a P/E ratio of around 155x, the market demands perfect leading indicators, not just another revenue beat
⠀
The key question: Is the weakness in bookings real, or is it primarily a result of shorter contract terms?
⠀
Palantir argues that Sovereign AI customers are increasingly starting with shorter contracts to deploy quickly and prove value. Contracts under twelve months are not fully captured in RPO, while shorter terms also depress TCV.
⠀
Why the bulls are looking past this: Annualized U.S. commercial revenue per customer reached approximately $5.7 million, about 90% more than the previous year. Palantir also pointed to pilot projects whose annual contract value increased by a factor of 5 to 15 after launch. Small entry-level contracts can therefore very quickly turn into significantly larger production contracts.
⠀
The Bull Case: Revenue has now been accelerating for 13 consecutive quarters, U.S. Commercial is growing at 148%, the operating margin is over 60%, and management continues to raise its guidance. Goldman, Mizuho, UBS, and Truist remain bullish because hardly any other software company combines this level of growth with this level of profitability.
⠀
The Bear Case: The valuation leaves little room for a genuine slowdown. If the weak TCV is not just a timing issue but actually points to weaker enterprise bookings, the gap between 96% revenue growth and 6% contract value growth will be hard to ignore.
⠀
Conclusion: Palantir did not disappoint with its latest numbers. The market is concerned about the metrics that look beyond the current quarter. For the stock, much now depends on whether the weak TCV merely reflects shorter-term Sovereign AI contracts or is the first real indication that bookings are no longer keeping pace with the exceptional revenue growth.
