Is Palantir A Buy After Dropping 20%?

"Palantir ( NASDAQ:PLTR) has been one of the best AI stocks of the year, nearly tripling in value as its software continues to attract governments and businesses. However, the stock dropped by more than 20% from its all-time high. Some investors have been buying the dip, but does it make sense to follow them? Here's what you should consider before buying Palantir stock at a discount."

"The Commercial Business Segment Is Hot Palantir got started with government contracts, but its commercial business segment is fueling future growth. The company's U.S. commercial revenue more than doubled year-over-year in Q3 to $486 million, making up more than 40% of total revenue. Palantir's revenue growth should continue to accelerate as commercial business sales make up a higher percentage of total sales."

"The company uses an annual recurring revenue model to scale growth from existing customers while signing lucrative deals with new customers. Palantir closed 204 deals of at least $1 million, 91 deals of at least $5 million, and 53 deals of at least $10 million. That revenue sticks around each year, and as Palantir continues to secure more contracts, its sales will continue to grow in perpetuity."

"Profits Are Also Expanding Palantir isn't only delivering high revenue growth, but its profit margins are also expanding. This is a key trait of growth stocks that end up outperforming the stock market in the long run. The AI software giant more than tripled its net income year-over-year, resulting in a 40.2% net profit margin. Surging profit margins have been recent, and it wouldn't be shocking to see Palantir deliver a 50% net profit margin in at least one of its 2026 quarters."

Palantir shifted from government contracts toward a booming commercial segment, with U.S. commercial revenue more than doubling to $486 million in Q3 and accounting for over 40% of total revenue. The company operates on an annual recurring revenue model and closed hundreds of sizable deals, including 204 of at least $1 million, 91 of at least $5 million, and 53 of at least $10 million. Customer count grew 45% year-over-year, driving higher plan upgrades. Net income more than tripled year-over-year, producing a 40.2% net profit margin and signaling expanding profitability alongside revenue growth.

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