Palantir Technologies Inc., the AI-powered data and analytics platform that counts the U.S. military among its chief customers, issued a quarterly outlook that pointed to a potential slowdown in sales growth.
The software developer expects revenue of roughly $2.65 billion in the three months ended Dec. 31. While that beat the $2.46-billion average of analysts’ estimates, the guidance translates into a roughly 15% quarter-over-quarter gain, falling well below the 20% increase the firm enjoyed in the last period. By that metric, the company would be on track for the slowest sequential growth since the second quarter of 2025.
Palantir’s sales were already showing signs of slowing in some places: Year-over-year commercial growth in the U.S. was smaller in the three months ended Sept. 30 than a quarter earlier.
Shares of Palantir tumbled Tuesday. Tech stocks have more broadly been under pressure since last week amid concerns about a potential AI bubble and hundreds of billions of dollars being poured into an unprecedented build-out of infrastructure to power the technology.
Palantir has emerged as one of the biggest software beneficiaries of the generative AI boom, with government agencies and corporations alike increasingly using the technology to make operational decisions.
The company’s stock has risen almost 900% over the past three years through Monday’s close, adding nearly $390 billion in market value. That swelling valuation and the company’s large sales gains, however, have prompted investors to question the sustainability of what Chief Executive Alex Karp has described as “jaw-dropping” growth.
The sequential slowdown in commercial customer additions, “suggests rising competition from frontier model providers” such as Anthropic PBC, Bloomberg Intelligence analyst Mandeep Singh said, adding that the company’s gross margin also shrank last quarter. The higher computing requirements tied to customers using its AI systems may also “remain a near-term headwind,” he said.
The potential for a slowdown in overall sales overshadowed what was otherwise an across-the-board beat for Palantir’s annual outlook. The company raised its annual revenue forecast to $8.53 billion, solidly surpassing the $8.2-billion average of analysts’ estimates. It also raised the outlook for U.S. commercial revenue to more than $3.56 billion, representing a growth rate of at least 143%.
In the third quarter, Palantir’s revenue surged 96% from a year ago to $2.31 billion, also above analysts’ estimates. U.S. commercial revenue totaled $984 million, surpassing U.S. government revenue for the first time in the company’s history. Earnings per share, excluding some costs, were 44 cents, compared with the average estimate of 41 cents.
“It would be an understatement to say that our results this past quarter were extraordinary,” Karp said in a letter to shareholders. Demand “has been absolutely ravenous and remains far from sated” in the U.S. Palantir sells software to the U.S. government and allied military forces. Karp, Chief Technology Officer Shyam Sankar and other company leaders have increasingly cultivated a pro-America image since President Trump took office.
The company said it closed 64 deals worth at least $10 million in the quarter.
While some analysts have warned that Palantir’s stock may be overvalued, Karp remained bullish in his call with investors: “We’ve gone from being the most attractive person in the physics department to being captain of the football team kind of thing,” he said.
Martin writes for Bloomberg.