Palantir slows down after record run: sales boom, but sky-high valuation weighs on stock

The software company led by Alex Karp once again beats Wall Street estimates and raises its outlook for 2025. But after an extraordinary year-long rally, investors are starting to wonder if the stock has gone too far.

After months of relentless gains, shares of Palantir Technologies Inc. have taken a breather. The artificial intelligence and data analytics software giant posted quarterly results that topped expectations and raised its full-year revenue forecast to $4.4 billion, but investors seem ready to pause. In after-hours trading, the stock fell about 3%, after initially jumping as much as 7% following the release of earnings.

The pullback comes after a dream year: Palantir shares have surged more than 150% since the start of 2025, closing Monday at a record $207.18. But with a price-to-sales ratio of 85 — the highest in the entire S&P 500 — many analysts fear the company’s valuation may have become stretched.

The numbers, however, remain impressive. In the quarter ended September, revenue rose 63% to $1.18 billion, well above market estimates of $1.09 billion. It was the 21st consecutive quarter that Palantir beat expectations. Adjusted earnings came in at 21 cents per share, versus the 17 cents analysts had forecast.

Growth was driven by U.S. customers: commercial sales in the United States soared 121% to $397 million, while government business climbed 52% to $486 million. International performance, especially in Europe, was softer.

Founded in 2003, Palantir has become one of the symbols of the new artificial intelligence boom, providing software capable of aggregating massive amounts of data and turning them into actionable insights — from business efficiency to military strategy. The company is a key partner of the U.S. government and several allies, including Poland, with which it has recently launched new collaborations in cybersecurity and AI.

During the conference call with investors, CEO Alex Karp struck an optimistic tone, noting that the results “are not normal — but they’re also not as explosive as they could be.” A polite way of saying that Palantir has no intention of slowing down, even if the market, for now, seems ready to catch its breath.

Andrea Pelucchi