Palantir Technologies Inc (NASDAQ:PLTR),which builds analytics tools for large companies and government agencies, stock fell 7.41% (As on November 4, 10:07:55 AM UTC-4, Source: Google Finance) after the company reported quarterly results that topped analysts’ estimates and issued better-than-expected guidance for the fourth quarter, attributing much of its strength to artificial intelligence. However, criticism has been rising that the broad U.S. market, and AI stocks in particular, have become too expensive and could be inflating into a dangerous bubble similar to the 2000 dot-com bust. Revenue in Palantir’s U.S. government business grew 52% in the quarter from a year ago to $486 million. The company has recently landed a deal worth up to $10 billion contract with the U.S. Army. Palantir has also faced criticism over how its tools are being used by government agencies, including U.S. Immigration and Customs Enforcement. Net income more than tripled to $475.6 million, or 18 cents per share, from $143.5 million, or 6 cents per share, a year earlier. The company generated $2 billion in adjusted free cash flow over the trailing 12 months.

Moreover, Palantir’s U.S. commercial business more than doubled to $397 million, higher than the projected $342 million. Total contract value for U.S. commercial deals closed more than quadrupled to $1.31 billion. Over the last few weeks, the company has announced new partnerships with Snowflake, Lumen and Nvidia. Its revenue from US government contracts jumped 52% to $486 million, above the $471 million expected. The company achieved its highest Total Contract Value (TCV) quarter ever at $2.8 billion, with significant deals closed.

PLTR in the third quarter of FY25 has reported the adjusted earnings per share of 21 cents, beating the analysts’ estimates for the adjusted earnings per share of 17 cents, according to LSEG estimates. The company had reported the adjusted revenue growth of 63 percent to $1.18 billion in the third quarter of FY25, beating the analysts’ estimates for revenue of $1.09 billion.

The company expects revenue of about $1.33 billion for the current period, exceeding the $1.19 billion expected by analysts, according to LSEG. The optimistic guidance comes even as the government shutdown stretches into its second calendar month, and potentially threatens some key contracts. The defense tech firm expects to see an adjusted operating income between $695 million and $699 million for the fourth quarter, more than the roughly $575 million expected. For the full year, Palantir now expects about $4.4 billion in sales, topping the $4.17 billion forecast by Wall Street. The company also bumped up its full-year free cash flow outlook to between $1.9 billion and $2.1 billion.