Better Bad News Buy: Palantir vs. ServiceNow
Palantir (PLTR) shares fell after Q3 results showed 96% revenue growth but only 6% increase in contract value. ServiceNow (NOW) also dropped after guiding lower cRPO growth. Palantir raised 2026 guidance above expectations. ServiceNow's forward P/E is below its 5-year average, while Palantir's valuation assumes sustained high growth.
How this was made
The 30-second read
Why it matters
Both firms show strong top‑line growth but face headwinds in contract expansion, influencing short‑term price action.
Market read
Earnings and guidance updates for PLTR and NOW drive immediate market reaction and valuation reassessment.
What to watch
Palantir's shift to shorter contracts could accelerate future upsell potential if execution improves.
Background
The article compares two high‑growth software firms after their latest quarterly results, highlighting revenue beats versus contract‑growth concerns.
Ticker impact
Palantir reported Q3 revenue up 96% and raised 2026 guidance, but total contract value grew only 6%, causing its shares to fall.
likely pressure as the market prices in slower contract value growth
Revenue beat is offset by minimal contract expansion, a key metric for Palantir's long‑term valuation.
ServiceNow beat subscription revenue guidance but cut Q4 cRPO growth to 18.5%, leading to a steep price drop earlier in the week.
moderate downside as investors digest slower cRPO growth despite valuation upside
Guidance downgrade on cRPO signals slower future revenue, outweighing the subscription beat.
Market effects
Both companies operate in the enterprise software/cloud sector; mixed results may temper broader AI‑software rally.
U.S. tech equities could see modest pullback as investors reassess growth expectations.
Limited to tech‑focused investors; no immediate macro spillover.
Counterpoint
ServiceNow's lower valuation may present a buying opportunity despite short‑term cRPO slowdown.
Key entities
- companyPalantir Technologies
AI data platform reporting Q3 results.
- companyServiceNow
Enterprise workflow cloud provider reporting Q3 results.
