Palantir Earnings Test AI Momentum Ahead of Feb. 2
Palantir earnings test enterprise-AI momentum after rapid commercial growth and raised guidance, while ICE ties and sector weakness pressure the stock.
KEY TAKEAWAYS
- Q3 revenue rose 63% to $1.18 billion and GAAP net income was $475.6 million.
- Q4 guidance midpoint was $1.33 billion, implying about 61% year-over-year growth.
- Remaining performance obligations totaled $8.6 billion and TCV bookings rose to $2.8 billion.
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Palantir Technologies Inc. (PLTR) approaches its Q4 2025 earnings report on February 2, 2026, following a quarter of rapid commercial growth and an expanded backlog that highlight enterprise-AI momentum. This progress comes despite pressure on the stock from controversy over Immigration and Customs Enforcement (ICE) contracts and weakness across the software sector.
Q3 Results and Guidance
On November 3, 2025, Palantir reported third-quarter revenue of $1.18 billion, a 63% increase year over year that exceeded the $1.09 billion consensus. GAAP net income reached $475.6 million, with earnings per share of $0.21, both beating expectations. The company posted a gross margin of 82.5% and an operating margin in the mid-30% range, producing a Rule of 40 score of 114%, a combined measure of growth and profitability.
Palantir issued Q4 guidance with a revenue midpoint of $1.33 billion, implying more than 61% year-over-year growth, and raised its full-year 2025 revenue midpoint to $4.40 billion, up about 53%. The company has a history of exceeding guidance in prior quarters.
Commercial Momentum and Backlog
U.S. commercial revenue accelerated sharply in Q3, rising 121% year over year to $397 million, accounting for roughly one-third of total revenue. This growth accompanied a significant expansion in contracted work. Remaining performance obligations and remaining deal value reached $8.6 billion, up 91% year over year, while total contract value bookings surged 151% to $2.8 billion.
Customer counts increased 45% to 911, with 83 deals above $1 million, including 40 exceeding $5 million and 21 above $10 million. The balance sheet showed $6.4 billion in cash and short-term investments and no long-term debt, supporting the company’s flexibility as it scales commercial deployments.
Contracts, Valuation, and Market Risks
Palantir disclosed a roughly $30 million contract with ICE to develop deportation-system technology and a separate $10 billion U.S. Army agreement announced in recent months. On January 6, 2026, an analyst initiated Buy coverage with a $223 price target. Other analysts remain split between Buy and Hold ratings.
Forward price-to-earnings multiples cited in coverage range from about 167x to over 200x, reflecting valuation tension amid AI-driven growth expectations. The stock has faced selling pressure linked to its association with the ICE contract and broader software-sector declines. Bearish technical patterns have also suggested potential near-term downside.
The upcoming Q4 earnings report will test whether Palantir’s commercial momentum and expanded backlog translate into sustained top-line growth and justify current forward multiples. Investors will weigh continued U.S. commercial gains against the cushion of a large backlog and a strong cash position.
