Is Palantir Stock a Buy After its Latest Earnings Report?

I've liked Palantir Technologies (NASDAQ:PLTR) stock for a long time and even predicted earlier this year that it would reach $220 before the end of 2026.

Unfortunately, after the company's third-quarter earnings report, it appears that prediction won't come true. But I'm still holding my shares.

Despite another quarter of outstanding revenue growth, Palantir shares fell more than 5% following the company's Q3 report and are now 16% below their all-time high. Investors appeared concerned about a slowdown in the company's total contract value (TCV), which increased just 6% year over year after jumping 49% in the second quarter.

Does that mean Palantir's remarkable growth story is starting to lose steam? Not necessarily.

Image source: The Motley Fool.

Palantir's growth remains outstanding

Palantir's third-quarter revenue was $2.31 billion, up 96% from a year earlier. U.S. commercial revenue grew 148% to $984 million, while U.S. government revenue increased 96% to $953 million. For the first time, Palantir generated more revenue from its U.S. commercial customers than from its U.S. government business.

I've long argued that Palantir's Artificial Intelligence Platform (AIP) is revolutionary because it helps companies put AI to work in their actual operations. Rather than simply generating text or answering questions, AIP allows businesses to connect AI models with their existing data and use them to make decisions and improve efficiency.

And the results suggest that businesses are increasingly willing to pay for those capabilities. Palantir's U.S. commercial customer count increased 29% year over year to 686, while the company closed 212 deals worth at least $1 million during the quarter.

The company also raised its full-year revenue guidance to between $8.53 billion and $8.534 billion, representing approximately 91% growth.

Those aren't the numbers of a company whose business is losing momentum.

Why the contract slowdown matters

There's a legitimate reason investors are paying attention to Palantir's contract numbers. Total contract value measures the potential value of contracts signed during a period, including certain contract options. It's an important indicator of future business, although not all of that value represents guaranteed revenue.

Palantir's third-quarter TCV reached $2.92 billion, increasing just 6% year over year. That was a sharp slowdown from the 49% growth reported in the second quarter.

CFO Dave Glazer explained on the company's earnings call that Palantir signed several large contracts that were shorter than usual as customers began adopting its new Sovereign AI capabilities. The company expects those agreements to grow in size and duration as customers expand their use of the technology.

That makes sense, but it's still something investors should watch. Shorter contracts can reduce reported TCV even when customers are spending more on Palantir's software.

Meanwhile, Palantir's total remaining deal value increased 55% year over year to $13.4 billion, suggesting its existing business continues to expand.

Still, Palantir's premium valuation leaves little room for disappointment. The stock has a forward price-to-earnings ratio of 108 times and a forward price-to-sales multiple of 51 times. If contract growth remains sluggish, investors may begin questioning whether the company's extraordinary revenue growth can continue.

Why Palantir remains a cornerstone in my portfolio

I've been bullish on Palantir for years, and its transition toward a larger commercial business is one of the biggest reasons.

Government contracts provide an important foundation, particularly as Palantir expands its work with the Pentagon through programs such as Maven. But the commercial market offers opportunities across industries, from manufacturing and healthcare to financial services. AIP gives Palantir a compelling way to pursue those opportunities.

My $220 price prediction for 2026 will probably miss the mark. I'm not thrilled about it, but I can accept it. But Palantir remains one of my cornerstone holdings because I believe the long-term opportunity is much larger than any single year's stock-price target.

A disappointing quarter for contract growth deserves attention. It doesn't erase the company's progress in turning AI into a practical business tool -- or my conviction in Palantir's long-term prospects.

Patrick Sanders has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.