Palantir's Contract Backlog Cools Even as Full-Year Guidance Climbs

Palantir shares fell 8.0% today, a day after the data-analytics company lifted its full-year revenue outlook. The trigger, according to media reports, was not the headline growth but the pace of contract expansion: total contract value — the metric Palantir reports as Total Contract Value — grew just 6% year over year in the third quarter of 2026, a sharp deceleration from 49% in the second quarter.

The slowdown was visible in the US commercial segment as well, where contract value growth eased to 11% from 153% in the prior quarter. Both the aggregate backlog measure and the separately reported US enterprise figure lost momentum, and that combination appears to have driven the selling pressure that followed the results.

Revenue Nearly Doubles, and the Outlook Rises

The top line told a different story. Revenue for the third quarter of 2026 climbed 96% year over year to $2.313 billion, and adjusted earnings per share came in at $0.44 against expectations of $0.41. GAAP net income reached $1.128 billion. CEO Alex Karp framed the quarter as an approximate doubling of the entire business versus the year-earlier period.

Palantir now projects full-year 2026 revenue of $8.530 billion to $8.534 billion, an increase on its prior guidance. For the fourth quarter alone, the company guided to $2.649–$2.653 billion — a range that sits entirely above the LSEG consensus of $2.46 billion cited by Reuters. Adjusted operating income for the closing quarter is expected at $1.64–$1.644 billion.

US Commercial Overtakes Government

Beneath the raised targets lies a notable shift in Palantir's revenue mix. US commercial revenue reached $984 million in the third quarter, up 148% year over year, and overtook the US government business for the first time. The public-sector segment contributed $953 million and continued to grow at a healthy clip — the crossover reflects the faster expansion of enterprise customers rather than any weakness in government work.

For 2026, Palantir expects more than $3.559 billion in US commercial revenue, which the company says equates to growth of at least 143%. Reuters attributes the demand to customers seeking greater control over their data and AI models.

Morgan Stanley Lifts Its Target

Morgan Stanley raised its price target on the stock today to $233 from $205 while keeping an "Equalweight" rating, according to media reports — a higher valuation ceiling paired with an unchanged recommendation. Separately, Form 4 filings disclosed compensation-related share awards to several executives: CTO Shyam Sankar received 564,830 shares, while CFO David A. Glazer and Ryan D. Taylor, Chief Revenue and Legal Officer, each received 211,208 shares.

With the guidance now in hand, the next yardstick for investors is clear: Palantir must deliver the promised fourth-quarter step-up and make good on its higher annual targets, with the US commercial business — the engine behind the new forecast — carrying much of the weight.