Why Palantir Stock Fell After Another Strong Quarter

Palantir Technologies (NASDAQ: PLTR) delivered another stellar earnings report after the market closed on November 3. Nevertheless, ongoing concerns about the company’s valuation, combined with the disclosure of a massive options trade against the company, sent PLTR stock down by almost 7.5% in early trading the day after the earnings release.

Some highlights include:

• U.S. revenue grew 77% year-over-year (YOY), with commercial revenue up 121% YOY and U.S. government revenue up 52% YOY.
• Adjusted earnings per share (EPS) of 21 cents, beating estimates of 17 cents and 110% higher YOY.
• Rule of 40 score of 114%.
• Closed 204 deals of at least $1 million, 91 deals of at least $5 million, and 53 deals of at least $10 million
• Adjusted free cash flow of $540 million; 46% margin, and TTM adjusted free cash flow of $2.0 billion; 51% margin.

The initial reaction to the report was bullish, but that began to reverse in after-hours trading and gained momentum in the premarket. There was nothing in the report to cause the sell-off, which supports the idea that some investors are taking an opportunity to take some profit on a stock that has risen by over 173% in 2025.

The sell-off contrasts with the overwhelmingly bullish sentiment of analysts. The Palantir analyst forecasts on MarketBeat show that four analysts have raised their price targets on PLTR stock the morning after the report. The largest increase is from Bank of America, which moved its target from $215 to $255.

Palantir Answers the Question Investors Are Asking

Investors have become concerned that the AI bubble is about to burst. That concern is rooted in the idea that, after spending billions on data centers and large language models (LLMs), when will companies begin to deliver tangible returns?

Palantir is one of the few companies offering a clear answer. Palantir software platforms help companies extract meaningful insights from the vast data generated by their AI systems. Palantir’s ontology framework organizes information from disparate data sources and utilizes AI tools to enable customers to make faster, more informed decisions. The company isn’t selling AI hype; it’s selling productivity.

As many investors are aware, Palantir primarily conducts its business with the U.S. government, maintaining deep ties to the U.S. military, where its software is utilized for mission-critical defense and intelligence applications.

However, the company also has a growing commercial business, which increased revenue by over 121% in the quarter. Those customers utilize Palantir’s technology to enhance efficiency, reduce costs, and ultimately monetize their own AI investments.

While Palantir’s valuation reflects high expectations, the company’s ability to convert AI capabilities into measurable value for clients sets it apart. For investors seeking real-world evidence of AI monetization, Palantir is a notable example worth watching.

Michael Burry Discloses a Bearish Bet

One reason for the sharp decline in PLTR stock is that Michael Burry disclosed that he has bought put options on five million shares of the company’s stock. Burry is famous (or infamous) for calling bubbles like the housing bubble in the mid-2000s. That makes this noteworthy.

To be clear, a put option is not the same thing as shorting a stock. Institutional investors, such as Burry, frequently use put options as a hedge rather than a purely bearish wager. Burry also disclosed put options on NVIDIA Corp. (NASDAQ: NVDA). This seems to be a case of Burry taking insurance against a broader market or tech sector correction, particularly related to artificial intelligence (AI).

The More Things Change With Palantir...

The most important thing to note is that long-term holders of Palantir stock have experienced this drop before, and it has been much worse. That means there is a possibility that the stock could have further to fall. In fact, it did just that between mid-February and the beginning of April. That was a drop of about 40%.

A similar drop now would take PLTR stock down around $120 per share. That would take it down to a level not seen since June. However, investors could also consider the approximately 18% drop in stock value from mid-August to September. That would suggest another 10% drop in the stock.

However, early trading activity suggests that buyers may have already established a floor for PLTR stock. That means that it may be more instructive for long-term investors to focus on the ceiling for Palantir rather than timing a short-term floor.

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The article "Why Palantir Stock Fell After Another Strong Quarter" first appeared on MarketBeat.