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Why Palantir’s Q3 Earnings Could Make or Break Its AI Defense Stock Rally

In the fast-paced world of artificial intelligence (AI) and defense technology, few companies have captured investor attention like Palantir Technologies (PLTR). Known for its data analytics platforms used by governments and militaries worldwide, Palantir has seen a meteoric rise in stock value over the past year. But now, all eyes are on its upcoming Q3 earnings report, set to be released in early November 2025. This moment could either cement Palantir’s status as a tech powerhouse or expose vulnerabilities in its high-flying valuation.

With a stock price that’s more than doubled in 2025—fueled by AI-driven defense contracts and growing government adoption—Palantir is walking a tightrope between investor expectations and real-world performance. As the U.S. government teeters on the edge of another potential shutdown, the stakes have never been higher.

Recent Updates: What’s Happening Now

Q3 Earnings: A Critical Test

Palantir is scheduled to release its third-quarter financial results on November 12, 2025, before market open. According to Yahoo Finance, this earnings call will be a pivotal moment for the company, testing whether its AI and defense tech momentum can justify its sky-high valuation.

• Revenue expectations: Analysts project Q3 revenue of $662 million, up 16% year-over-year, according to consensus estimates.
• Earnings per share (EPS): Expected to hit $0.07, reflecting continued profitability after years of losses.
• Government contract visibility: Investors will scrutinize how much of this growth comes from federal contracts—especially amid fears of a U.S. government shutdown.

“The market is pricing in perfection,” said one Wall Street analyst quoted in Bloomberg. “Any sign of weakness in government spending or AI integration could trigger a sharp correction.”

Government Shutdown Looms

A potential U.S. government shutdown—set to begin November 17 if Congress fails to pass a spending bill—adds another layer of uncertainty. Palantir relies heavily on federal contracts, particularly through its Gotham platform, which supports intelligence, defense, and national security operations.

While essential services like national defense typically continue during shutdowns, new contract approvals, payments, and procurement processes often slow to a crawl. For a company like Palantir, where government revenue accounts for over 60% of total sales, even a brief disruption could impact short-term cash flow and investor confidence.

Investor Sentiment: Buy or Sell?

Investor’s Business Daily recently posed the question: Will Third Quarter Earnings Results Make Palantir Stock A Buy Or Sell? The answer, it seems, depends on how the company addresses three key areas: 1. Sustained AI adoption in defense and intelligence 2. Commercial sector expansion to reduce reliance on government 3. Operational efficiency and margin improvements

The article notes that institutional investors have been increasing their stakes in PLTR, with BlackRock and Vanguard boosting positions in Q2. However, some hedge funds remain skeptical, citing valuation concerns.

“Palantir’s momentum is impressive, but it’s not immune to macroeconomic shocks,” the IBD report cautioned.

Contextual Background: From Spyware to Silicon Valley Star

Origins in National Security

Founded in 2003 by Peter Thiel, Stephen Cohen, and Alex Karp, Palantir began as a data-mining tool for the U.S. intelligence community, including the CIA, FBI, and Department of Defense. Its early work focused on counterterrorism—helping agencies connect disparate data points to uncover hidden threats.

The name “Palantir” comes from The Lord of the Rings—a magical seeing-stone used to observe distant events. The metaphor was intentional: the company’s software allows users to “see” patterns in massive datasets.

Gotham vs. Foundry: The Two Engines of Growth

Today, Palantir operates two core platforms: - Gotham: Used primarily by governments and defense agencies. It integrates data from satellites, surveillance systems, and intelligence reports to support real-time decision-making. Think: tracking enemy movements, identifying cyber threats, or managing disaster response. - Foundry: Targets commercial clients in industries like healthcare, finance, and manufacturing. It helps companies unify siloed data, optimize supply chains, and improve operational efficiency.

While Gotham remains the company’s bread and butter, Foundry is where Palantir is pushing for long-term diversification. In 2024, Foundry revenue grew 28% year-over-year, outpacing Gotham’s 12% growth.

The AI Revolution: A Turning Point

Palantir’s recent surge is largely tied to its AI and machine learning capabilities. In 2023, the company launched AIP (Artificial Intelligence Platform), a suite of tools that enables users to build, deploy, and manage AI models directly within Gotham and Foundry.

Key features include: - Natural language processing (NLP) for querying data - Predictive analytics for supply chain risks - Autonomous agents that suggest actions based on real-time data

This AI push has resonated with both government and corporate clients. For example: - The U.S. Air Force uses AIP to predict aircraft maintenance needs. - Merck leverages Foundry with AI to streamline drug manufacturing. - NATO has tested AIP for cyber threat detection.

As one industry insider put it: “Palantir didn’t just jump on the AI bandwagon—they built the engine.”

Immediate Effects: What’s at Stake Right Now

Valuation Concerns

Palantir’s stock currently trades at a price-to-sales (P/S) ratio of over 25, far above the tech sector average of around 6–8. This reflects investor optimism, but also creates vulnerability.

Bloomberg recently warned that Palantir’s “unwavering momentum” has sent its valuation into the “stratosphere,” raising red flags about sustainability. The article highlights that the company’s market cap now exceeds $80 billion—a figure that assumes flawless execution in a volatile environment.

“High valuations demand high performance,” the Bloomberg report stated. “One misstep in Q3 could unravel months of gains.”

Government Dependence: A Double-Edged Sword

While government contracts provide stability, they also expose Palantir to political and budgetary risks. For instance: - A change in administration could shift defense spending priorities. - Budget cuts or delays (like during a shutdown) can stall project funding. - Public scrutiny over surveillance and data privacy remains a concern.

In Canada, where Palantir has expanded into public health and emergency management, these issues are particularly sensitive. The company recently partnered with a provincial health authority to track pandemic-related data—sparking debates about data sovereignty and algorithmic transparency.

Competitive Landscape

Palantir isn’t alone in the AI-defense space. Competitors include: - Anduril Industries: A defense tech startup backed by Peter Thiel, focusing on autonomous drones and border security. - Microsoft Azure for Government: Offering AI-powered analytics for defense and intelligence. - Snowflake and Databricks: Cloud data platforms increasingly used by government agencies.

What sets Palantir apart is its end-to-end integration—from data ingestion to AI modeling to operational deployment. But as more players enter the market, differentiation will become harder.

Future Outlook: Where Does Palantir Go From Here?

Three Scenarios for Q3 and Beyond

1. The Bull Case: AI Dominance and Diversification

If Palantir delivers strong Q3 results—with double-digit revenue growth, expanding margins, and clear evidence of commercial adoption—the stock could surge further. Key indicators to watch: - Foundry revenue growth exceeding 25% - New government contracts signed despite shutdown fears - AIP adoption rate among existing clients

In this scenario, Palantir could become a $100 billion company by 2026, solidifying its place as a leader in AI-driven decision-making.

2. The Bear Case: Growth Slows, Valuation Cracks

If Q3 shows signs of weakness—such as delayed government payments, slowing AI adoption, or margin compression—investors may flee. A government shutdown could amplify these effects, especially if it delays new contract awards.

In this case, Palantir’s stock could drop 2