Palantir third-quarter preview: Growth momentum continues, but share performance raises the earnings bar
Deutsche Bank expects Palantir’s third-quarter revenue to exceed the midpoint of company guidance by 3% to 5%, with both commercial and government businesses supporting growth. But against a higher year-earlier base, even strong growth could appear as a slowdown in the year-over-year rate.
Original source：Deutsche Bank ResearchFirst published on Unhidea：Original source date：
Key takeaway
Deutsche Bank is upbeat about the resilience of growth in Palantir’s commercial and government businesses and has raised its price target to $225, but the stock’s earlier surge and a higher comparison base have raised the bar for interpreting third-quarter results.
How far above guidance must third-quarter revenue come in to maintain the appearance of growth?
The midpoint of the company’s third-quarter revenue guidance is $2.162 billion, corresponding to year-over-year growth of 83%. Deutsche Bank assumes actual revenue will exceed this midpoint by 3% to 5%, but has limited confidence in the precise magnitude of the beat.
The bank’s base case is 4% above the guidance midpoint, corresponding to revenue growth of 90% year over year, a slowdown of about 3 percentage points from the previous quarter. Given the higher year-earlier comparison base, this still implies quarter-over-quarter growth of 16%, above the 10% average for the third quarter over the previous three years.
If revenue exceeds the guidance midpoint by 6%, the bank calculates that year-over-year growth could reach 94%, an acceleration of about 1 percentage point from the previous quarter. Palantir shares have outperformed software ETF IGV by nearly 50% since the previous quarter’s results were announced, so even if revenue exceeds guidance by 3% to 5%, the apparent slowdown in year-over-year growth could still affect the market’s reaction.
Deutsche Bank expects commercial revenue to grow 105% year over year, slowing by 5 percentage points from the previous quarter, and government revenue to grow about 65%, slowing by 15 percentage points. Both forecasts are broadly in line with market consensus.
Why is commercial growth expected to continue?
In the second quarter, US commercial revenue grew 149% year over year and 28% quarter over quarter, total US commercial contract value reached a record $2.132 billion, and remaining deal value grew 124% year over year, providing momentum for the third quarter.
Deutsche Bank observes that applications are expanding across more regions, industries and channels: Latin American insurer GNP Seguros is expanding its use of AIP and Foundry, the SNP partnership involves SAP data migration, and PwC and Fujitsu are helping expand implementation capacity and ease potential shortages of forward-deployed engineers as demand grows.
How do more AI model calls translate into demand for Palantir’s platform?
AIP and Ontology sit between underlying models and customers’ production workflows, governing how models access proprietary data, follow business logic and take action. Deutsche Bank believes that as more agents enter production, model calls and controlled data interactions will increase, raising the platform’s strategic value and potential usage.
Companies also face rising inference costs, the risk of proprietary information leaks and dependence on a single model provider. AIP Evolve can assess different models against quality, cost, latency and control requirements, and adjust call paths or replace unnecessary model calls with deterministic code, allowing customers to change models without rebuilding surrounding workflows.
What progress has the government business made, and what is the profit outlook?
The number of US defense users of Maven rose from about 50 thousand in January 2026 to more than 100 thousand in September. The US Army also awarded Palantir a $127 million contract to lead production and integration of the first 8 TITAN intelligent target recognition systems, with delivery expected within 18 months. Contract awards and revenue recognition will continue to fluctuate from quarter to quarter.
Deutsche Bank expects third-quarter non-GAAP operating profit to be at least slightly above the company’s guidance midpoint of $1.294 billion, with an operating margin close to 61%, up about 10 percentage points year over year.
The bank maintains its Buy rating and has raised its price target from $200 to $225. Its discounted valuation uses a weighted average cost of capital of 9.75% and a terminal growth rate of 3.5%; competition, US government spending and execution are the main risks listed in the report.
