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PALANTIR STOCK DROPS DESPITE RECORD RESULTS
In Q3 2025, Palantir posted revenue of $1.181 billion (around R22 billion), up 63% year-on-year, beating the $1.09 billion estimate. Adjusted EPS came in at $0.21 (+110%), and GAAP profit surged 231% to $476 million (R8.9 billion). Free cash flow hit $540 million (R10 billion), up 46%. The company sits on $6.4 billion (R120 billion) in cash and carries zero debt. U.S. commercial revenue rose a massive 121%. Management raised its guidance again — Q4 revenue is expected at $1.33 billion (R25 billion), versus $1.19 billion forecast, and full-year 2025 revenue is guided to between $4.396–$4.400 billion (+53%). Despite those impressive results, PLTR shares slid 7.2% in Tuesday trading, closing around $192 after touching $185 intraday. Year-to-date, the stock remains up 156%, with a market cap near $450 billion (roughly R8.4 trillion). For South African investors, this is a lesson that even world-class numbers can’t always satisfy markets when valuations are sky-high.
Why did the market react negatively?
Markets aren’t always rational. Palantir beat expectations across the board, yet its share price collapsed because investors had already priced in perfection. Before the earnings release, PLTR was trading at roughly 229× forward free cash flow and over 200× forward earnings — levels even Naspers or Tesla might blush at.
Overvaluation and profit-taking
After a 150% rally this year, Palantir’s valuation had stretched to extremes. Traders used the strong results as an excuse to take profits — the classic “sell the news” phenomenon that South African investors will recognise from local tech rallies like Prosus or Sibanye during their peaks.
AI sector wobble
Adding to the pressure, the Nasdaq fell 2% on the same day amid renewed fears of an “AI bubble.” The entire sector sold off, with Palantir — one of the most visible AI names — taking a harder hit than most. It’s the global equivalent of the JSE Tech Index correcting after months of euphoric inflows.
The Michael Burry effect
A 13F filing revealed that legendary investor Michael Burry — famous for The Big Short — held large put options on Palantir ($912 million) and Nvidia ($187 million), making up 80% of his portfolio. Although the data were 45 days old, headlines screamed “Big Short 2.0,” triggering automated selling and panic among short-term traders.
Valuation >200× forward earnings
Nasdaq fell 2% amid AI-bubble fears
Michael Burry’s puts rattled markets
Algorithmic selling accelerated declines
Profit-taking after a 156% YTD surge
In short: it wasn’t bad results, just too-high expectations — a familiar story for any investor who’s watched high-momentum JSE names lose steam after a strong run.
Strong results, solid fundamentals
Despite the stock’s pullback, Palantir’s fundamentals remain outstanding. It’s one of the few AI-first software companies globally delivering both hypergrowth and profitability — something rare even among the U.S. tech elite.
Explosive U.S. commercial expansion
The company’s U.S. commercial business jumped 121%, driven by strong adoption of its Artificial Intelligence Platform (AIP). The platform is being deployed across healthcare, defence, and energy — industries that South Africa, too, is exploring for digital transformation through AI and data analytics partnerships.
Cash-rich and debt-free
With $6.4 billion (R120 billion) in cash and no debt, Palantir has the flexibility to reinvest, acquire, and expand globally. In an era of tight global liquidity, that kind of balance sheet strength is a massive strategic asset.
Guidance raised again
Management once again upgraded full-year guidance: Q4 revenue forecast at $1.33 billion (R25 billion) and 2025 free cash flow of $1.9–2.1 billion (R35–38 billion). Those numbers put Palantir among the world’s fastest-scaling enterprise software firms.
Revenue: +63%
EPS: +110%
GAAP Profit: +231%
Free Cash Flow: +46%
Cash: $6.4B (R120B)
Debt: 0
It’s rare to see a company in AI with this mix of profitability, scale, and cash strength — a quality long-term investors, from Johannesburg to New York, are starting to prize more than ever.
Long-term opportunity or short-term trap?
For short-term traders, Tuesday’s fall hurt. But for patient investors, it may be an opportunity. Palantir is still riding the biggest wave in enterprise software since the cloud boom — AI integration into every workflow on Earth.
AIP: The AI engine of the future
Palantir’s AIP is fast becoming the go-to system for companies embedding AI into operations. It’s the digital infrastructure layer that converts data into decision-making — much like how South Africa’s banks and insurers are now adopting AI for risk modelling and fraud detection.
Technical support and value zones
The $185–190 range (around R3,450–R3,550) is a strong technical support area. With a 52-week high of $207 (R3,860) on 31 October, this pullback looks more like a cooling-off phase than the end of the rally. For long-term investors, dips below R3,500 may offer attractive entry points.
+156% YTD before correction
AI industry still in early innings
Debt-free, strong cash flow
Global enterprise AI adoption growing fast
Support around $190 (R3,550)
For South African investors seeking exposure to the AI megatrend, Palantir is a global leader worth watching. Its combination of profitability, innovation, and scale makes it the kind of stock that can compound for years — even if the ride gets bumpy along the way.
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