Palantir Stock Plummets 1.5% Despite Record Revenue and Raised Guidance Ranks Fourth in U.S. Trading Volume Amid Valuation Skepticism

Market Snapshot

Palantir Technologies (PLTR) closed 1.49% lower on November 5, 2025, following a mixed performance driven by strong earnings and guidance but weighed by valuation concerns and broader market volatility. The stock’s trading volume reached $14.18 billion, a 38.8% decline from the previous day, ranking it fourth in volume among U.S.-listed equities. Despite a 63% year-over-year revenue surge to $1.18 billion in Q3 and a raised full-year revenue forecast to $4.4 billion, the stock fell 4–6% in after-hours trading, reflecting investor skepticism about its stretched valuation.

Key Drivers

Palantir’s Q3 results exceeded expectations, with revenue of $1.18 billion and adjusted earnings of $0.21 per share, outpacing the $0.17 per share forecast. The company raised its Q4 revenue guidance to $1.33 billion and full-year projections to $4.4 billion, citing robust growth in both government and commercial segments. Government revenue increased 52% to $486 million, driven by defense contracts, while commercial revenue more than doubled to $397 million. CEO Alex Karp highlighted the company’s role in AI adoption, noting that “weak AI companies will disappear very quickly.”

Analyst sentiment remains divided. Bank of America and Piper Sandler raised price targets, with the former setting a $255 target and a “Buy” rating, while Royal Bank of Canada and Jefferies maintained “Underperform” or “Hold” ratings. The average analyst target price stands at $168.33, with five “Buy” ratings, sixteen “Hold” ratings, and two “Sell” ratings. This disparity reflects diverging views on Palantir’s valuation, as the stock trades at a forward P/E of 217 and a P/E ratio of 454.15, significantly higher than peers.

The stock’s 170% year-to-date gain has drawn criticism from analysts and investors, with Karp acknowledging the “nosebleed zone” valuation in a shareholder letter. While Palantir’s free cash flow guidance increased to $1.9–2.1 billion, concerns persist about sustainability amid market tightening. The company’s joint ventures, such as a $10 billion U.S. Army contract and partnerships with Snowflake and Nvidia, underscore its AI growth strategy, but some analysts caution that competition and macroeconomic headwinds could temper momentum.

Market conditions further pressured the stock. Broad tech indices weakened in early European trading, with Nasdaq futures pointing to a 1.3% decline. Palantir’s beta of 2.63 highlights its volatility, as shares fell nearly 6% in Frankfurt trading despite outperforming earnings estimates. Insiders, including CEO Alex Karp, sold shares in August and September, totaling $33.7 million, raising questions about management’s confidence in the valuation.

The debate over Palantir’s long-term prospects centers on its ability to maintain growth while addressing valuation skepticism. While Karp emphasized the company’s “authentic and substantive growth,” critics argue that its high multiples rely on continued AI demand and execution against ambitious targets. With institutional ownership at 45.65% and a market cap of $452.5 billion, the stock remains a focal point for investors weighing high-risk, high-reward AI plays against broader market corrections.