📌 WHAT HAPPENED

Palantir Technologies (NYSE: PLTR) reported Q3 2025 earnings that exceeded Wall Street expectations, with adjusted earnings per share of $0.07 versus the consensus estimate of $0.06. Revenue rose 17% year-on-year to $558 million, also topping expectations. Commercial customer growth was a standout, up 37% year-over-year and contributing to a 23% surge in U.S. commercial revenue.

Despite a modest 12% rise in government revenue, Palantir’s total customer count grew by 34% year-over-year to 453, with net income reaching $72 million (GAAP net income). Free cash flow remained robust at $135 million, and adjusted operating margin stood at 29%.

💡 WHY IT MATTERS

Palantir’s pivot toward commercial clientele appears to be yielding results, with U.S. commercial momentum dampening investor concerns about decelerating government contracts. Importantly, the company raised its full-year revenue guidance range to $2.216–$2.22 billion, up from $2.21 billion previously.

Key to this strength is demand for Palantir’s artificial intelligence platform (AIP), which management referenced as a key differentiator. This AI-driven demand provides a compelling growth story amid broader market volatility around software and defence tech names.

📈 INVESTMENT PERSPECTIVE

Palantir’s accelerating commercial growth and sustained profitability suggest a maturing business model with increasing margin stability. The company has posted its fifth consecutive quarter of GAAP profitability—an important milestone as it seeks broader institutional investor appeal.

With shares up over 140% year-to-date, traders will debate whether valuation has run ahead of fundamentals. However, strong cash generation, deep commercial penetration, and rising AI adoption point to a multi-quarter growth runway.

Nonetheless, subdued government growth and questions around long-term AI monetisation warrant measured optimism. Investors should watch Q4 execution and international commercial traction closely for continued validation.

🎯 BOTTOM LINE

Palantir delivered an upside surprise in Q3, driven by explosive U.S. commercial growth and firm AI platform demand. With improving margins, rising revenue, and strong FCF, the business looks structurally sturdier. While valuation is elevated, the long-term AI-driven opportunity justifies sustained investor interest.