Palantir stock enters valuation debate after strong Q3 growth

Palantir stock traded at 155.29 euros on Lang & Schwarz at 14:21 CET on Wednesday, November 11, 2026.

Morningstar's November 10 review put the company's strong third quarter alongside a more demanding valuation test. The analyst raised the fair value estimate from 153 US dollars to 156 US dollars and upgraded Palantir's economic moat rating from narrow to wide. Morningstar retained a three-star rating and a very high uncertainty assessment.

Commercial Momentum Changes The Mix

Palantir reported third-quarter revenue of 2.3 billion US dollars on November 2, up 96 percent from the same period a year earlier, according to the Morningstar review. US commercial revenue rose 148 percent to 984 million US dollars, overtaking US government revenue of 953 million US dollars for the first time.

The shift gives investors a new way to assess Palantir's growth profile. A larger commercial contribution can broaden the customer base and reduce reliance on public-sector budgets, while the pace of expansion still depends on the company's ability to turn initial deployments into wider platform use. Morningstar expects contract expansion to remain the main revenue driver.

Palantir also raised its 2026 sales outlook to 8.53 billion US dollars, an increase of nearly 500 basis points in the forecast. Morningstar said sovereign artificial intelligence sales supported the quarter, but noted that shorter and smaller early contracts slowed total contract value growth. The analyst characterized such additions as potentially lumpy rather than conclusive evidence of weakening demand.

Risks Remain Material For Investors

Morningstar expects US commercial growth to normalize to 59 percent in 2027 from 145 percent in 2026 as comparisons become harder. Its model calls for compound annual revenue growth of 47 percent over five years and 34 percent over ten years, with commercial growth ahead of government growth in both periods.

The valuation leaves little room for execution setbacks, according to the review. Morningstar highlighted customer concentration and the sensitivity of major government contracts to budget constraints, political scrutiny and abrupt termination. Competition from large technology companies, frontier artificial intelligence developers and internal corporate teams is another risk if cheaper and faster inference lowers barriers to entry.

Morningstar's wide-moat view rests on switching costs and intangible assets. The analyst points to the applications, workflows and automations built around Palantir's platforms, which can make the software deeply embedded in customer operations. The company also had 1.1 billion US dollars in cash and cash equivalents, 7.6 billion US dollars in marketable securities and no debt at the end of 2025, according to the review.

US software and artificial intelligence shares remain sensitive to expectations for future growth; investors can follow the wider market through the S&P 500 market environment.

Further company-specific developments are available in More news and analyses on Palantir stock.