Palantir's AI quarter tops $2B, but customers are signing shorter deals

Palantir's third quarter looked like a victory lap. Its press release boasted about beating expectations by a wide margin. But the stock still slipped a little on Tuesday, and Julie Bort at TechCrunch explains why: the fastest-growing part of the business is buying AI in short bursts.

The good numbers

Revenue hit $2.31 billion, up 96% on a year ago and 20% on the prior quarter, above the $2.18 billion analysts expected, and Palantir's first quarter over $2 billion. Adjusted earnings came in at 44 cents a share against 41 expected, and the company raised its full-year revenue forecast.

The headline: US commercial revenue, $984 million and up 148%, passed US government revenue, $953 million, for the first time. Enterprises are signing up for Palantir software that runs frontier models and custom-trains open-weight ones without sending their data and processes to outside AI labs. Palantir's forward-deployed engineers, who work directly inside customers to tailor the software, help too.

The catch

Companies are moving fast, but often on short trials. CEO Alex Karp described a pattern of quicker deployment and shorter contracts that can then grow a lot. TechCrunch sees a wider trend: corporations will try AI software quickly and skip the usual procurement bureaucracy, but they're also quicker to cancel.

The contract numbers back up the caution. Palantir closed $1.46 billion in total contract value from US enterprises this quarter, which sounds big until you compare it with last quarter's record $2.13 billion. That looks like slowing sales, at least this quarter.

Karp, for his part, isn't worried. He described Palantir's sudden popularity with corporate buyers with a campus metaphor about going from the physics department to captain of the football team, and insisted customers who adopt Palantir don't leave.

Why it matters beyond Palantir

Short, expandable AI contracts are becoming normal. They're great for adoption and bad for predictability, and they put pressure on every enterprise AI vendor to prove value inside a trial window instead of a three-year deal. It's the same pressure behind startups like Larridin selling proof that AI spend works.

The fourth quarter, when big enterprises usually sign their largest tech deals, will show which way it goes. Palantir is guiding US commercial revenue above $3.559 billion for the year, at least 143% growth.

Scoreboard update: Draw. Companies buy Palantir's AI faster than ever, and keep the option to walk away.

Stay undead.