Key Points
Palantir grew revenue 96% to a record $2.31 billion in the third quarter, beating estimates of about $2.18 billion, and raised its full-year forecast to as much as $8.534 billion.
U.S. commercial revenue jumped 148% to $984 million and topped U.S. government revenue for the first time in the company's history.
The stock fell 1.6% on Tuesday to $175.40, after falling as much as 7.3% early, as investors focused on slowing bookings. It now sits about 16% below its October 9 record close of $209.05.
Apple also beat on revenue and earnings, then fell 1.9% to $331.90 after guiding gross margin down to 45%–46% on what CEO John Ternus called "unprecedented" memory prices.
Election Day split the market: the Dow fell 0.4% while the S&P 500 rose 0.4% and the Nasdaq rose 0.8% on a chip rebound.
Palantir just delivered one of the best quarters any software company has ever reported. Revenue nearly doubled. Profit more than doubled. Management raised every forecast it gives.
And on Tuesday, the stock fell 1.6% to $175.40.
It was the same story at Apple: a beat on the top and bottom lines, followed by a stock that fell 1.9%. On Election Day, Wall Street made one thing clear. In this market, beating the numbers is no longer enough.
The Quarter Was Enormous
Palantir's third-quarter revenue grew 96% from a year earlier to $2.313 billion, the first time it has crossed $2 billion in a single quarter. Analysts had expected about $2.18 billion. Adjusted earnings came in at $0.44 a share, ahead of the $0.41 consensus. GAAP net income more than doubled to $1.128 billion, a 49% margin.
The growth was led by corporate America. U.S. commercial revenue jumped 148% to $984 million, and for the first time in Palantir's history it was larger than U.S. government revenue, which grew 96% to $953 million. Adjusted operating margin hit 62%. The company's "Rule of 40" score, which adds growth and margin together, reached 158%. Most software companies are thrilled to clear 40.
Then came the guidance. Palantir now expects fourth-quarter revenue of $2.649 billion to $2.653 billion and raised its full-year forecast to $8.530 billion to $8.534 billion, or 91% growth. It also lifted its adjusted free cash flow forecast to $4.8 billion to $5.0 billion.
Why the Stock Fell Anyway
The problem was a single line on the scorecard: bookings.
Palantir closed $1.463 billion of U.S. commercial contract value in the quarter, up just 11% from a year ago. In the second quarter, that same figure jumped 153% to a record $2.1 billion. Total contract value across the company grew only 6%.
UBS, which still rates the stock a Buy, called a flat reading in remaining performance obligations, a measure of backlog, "the only real flaw in the print," noting it was the first time since early 2023 that the figure didn't grow from the prior quarter. Palantir blamed shorter contract lengths.
That matters because Palantir's valuation is built on the future, not the present. Investors are paying for years of growth in advance. When the pipeline of new deals slows, even briefly, the math behind that premium gets shaky. "Priced to perfection" was how Direxion's Ryan Lee described it heading into the report.
The selling was sharp at first. The stock fell as much as 7.3% in the opening minutes before buyers stepped in, and it closed at $175.40. That leaves it about 16% below its record close just three and a half weeks ago.
Apple Ran Into the Same Wall
Apple's first quarter under new CEO John Ternus looked strong on paper. Revenue reached $114.48 billion against $113.39 billion expected, and earnings of $2.10 a share topped the $1.99 estimate. iPhone revenue rose 17% to $57.58 billion.
But Apple guided December-quarter gross margin to 45% to 46%, down from 47.9% and below the roughly 46.3% Wall Street expected. "What we're seeing with memory pricing right now is unprecedented," Ternus told analysts. Services growth is expected to slow to 8% to 9%, below forecasts of about 10.7%.
Just as we wrote before the report, Apple had held up while the rest of Big Tech bled, and it needed to prove why. The market wasn't convinced. Apple fell 1.9% to $331.90.
The Rest of the Market
Election Day split the market. The Dow fell 0.4%, while the S&P 500 rose 0.4% and the tech-heavy Nasdaq rose 0.8%, the reverse of Monday, when the Dow was the only major index to finish higher.
Chipmakers were the bright spot. After Marvell's $115 billion bet on Lumentum sent both stocks sliding on Monday, Nvidia rose 2.3% and AMD rose 3.7% ahead of AMD's report. Marvell rose 0.3%, even after Bank of America downgraded it to Neutral, citing extended regulatory review among its concerns about the deal.
Oil swung back and forth. Prices jumped in the morning after the U.S. struck Iran's Qeshm Island in the Strait of Hormuz, then slipped back toward four-week lows as officials described the strikes as limited and talk of a deal continued. The 10-year Treasury yield climbed back toward 4.95%.
What Lands Next
The biggest news may arrive overnight. Polls close Tuesday night in a midterm election that will decide control of Congress, and as we noted that morning, the market had already started voting early. CNBC reported that a Democratic sweep is not yet priced into stocks, which could make for a volatile Wednesday open.
AMD's results landed after Tuesday's close, too late for this article. Wall Street was looking for record revenue of about $13.09 billion and adjusted earnings of about $1.95 a share. After Palantir and Apple, the bar is clear: AMD has to beat and show that its forward bookings are still accelerating. Coherent, Lumentum's biggest rival, reports Wednesday, and the October jobs report lands Friday.
The lesson of the past week is simple. Record results are now the price of admission. What moves AI stocks is what comes next, and on Tuesday, Palantir's forward signals weren't strong enough.
This article is for informational and educational purposes only and does not constitute investment advice or a recommendation to buy or sell any security.
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