Hiding inside Palantir’s skyrocketing quarter is a foreboding signal

Palantir's U.S. commercial revenue surpassed U.S. government revenue for the first time ever. The data analysis company Palantir delivered such a huge third-quarter earnings report on Monday that its press release even bragged that the numbers were “crushing consensus expectations.” Yet retail investors were lukewarm on the company on Tuesday, with the stock trading slightly down. That’s because Palantir’s enterprise sales, its big growth area, showed signs of slowing. First, the good news for the company’s investors. Revenue grew 96% from a year earlier, and 20% from the previous quarter, to $2.31 billion, beating analysts’ expectations of $2.18 billion. It was the first time Palantir has topped $2 billion in a quarter.

Palantir also reported adjusted earnings per share (profit per share, excluding certain one-time items) of 44 cents, compared with analysts’ expectations of 41 cents. The company even raised its revenue guidance, or forecast, for the full year. Normally, that alone would send a stock soaring. The clincher was that Palantir’s U.S. commercial revenue surpassed U.S. government revenue for the first time ever. The company reported $984 million in commercial contracts (up 148% from the year-ago quarter), versus $953 million in U.S. government revenue. The reason for all this love from enterprises? They are signing up for the company’s AI software that can run frontier models and custom-train open-weight