Palantir's stock fell 7% despite a strong earnings report. What are analysts saying?

Palantir shares fell more than 7% in premarket trading on November 3, despite the AI solutions developer’s strong quarterly report. Analysts remain confident in the company’s long-term prospects: they cite Palantir as a favorite in the software sector due to high demand for AI-powered products.

"Palantir reported another outstanding quarter, significantly exceeding expectations. Revenue growth continues to accelerate thanks to parabolic demand for AI solutions in the U.S. The bet on Palantir’s commercial segment has paid off: commercial revenue exceeded government revenue for the first time. “We continue to view Palantir as the most promising company in the software market,” said D.A. Davidson analyst Gil Luria (quoted on Yahoo Finance).

Following the release of the earnings report, Gil Luria reaffirmed his “buy” rating on Palantir shares with a price target of $250. This implies a 40% increase from the stock’s closing price on November 2.

“Looking ahead, the performance of this quarter reinforces our view that 2027 will be a watershed year for AI monetization, and Palantir remains our top pick in the software sector,” — Yahoo Finance quotes Dan Ives, a partner at Yorkville Ives.

Palantir reported a 96% year-over-year increase in revenue for the third quarter and raised its full-year 2026 guidance. Palantir’s revenue growth has been accelerating with each reporting period since the third quarter of 2023, according to Barron’s. CEO Alex Karp attributed this to demand for what he calls “sovereign AI”—an approach in which organizations retain greater control over the artificial intelligence models they use. The concept of sovereign AI has become a key factor setting Palantir apart from AI model developers such as Anthropic and OpenAI, Barron’s adds.

However, the company also reported a slowdown in the growth of new contracts with U.S. commercial customers. Investors “will undoubtedly be looking for evidence in the coming quarters that this was a temporary blip rather than a structural trend,” analysts at Piper Sandler said (as quoted by CNBC).

Following the release of its report, Morgan Stanley raised its price target for Palantir shares from $205 to $233, while maintaining its “in line with the market” rating, which implies a 30% increase from the most recent closing price.

The most common analyst recommendation for Palantir stock is “buy”: the stock has 27 “Buy” and “Overweight” ratings, according to MarketWatch. In addition, the stock has nine “Hold” recommendations and two “Sell” recommendations (“Sell” and “Underweight”).

This article was AI-translated and verified by a human editor