Palantir's Report Moved My Buy Price for the Stock. Here's the New Number.

In mid-October, I set a simple rule for buying Palantir Technologies (NASDAQ:PLTR) stock: 120 times the earnings it posted for its last four quarters. Back then, that was around $140 per share, while the stock traded near $198.

I also said that if Palantir's earnings kept rising, my buy price should rise with them.

They did. Palantir's third-quarter report, released after the market closed on Monday, Nov. 2, lifted those trailing earnings enough to move my number to about $172 per share.

And the stock moved the other way. Shares closed Monday at $178.34 and dropped about 3% after hours to roughly $173 as of this writing. Shares are now down about 17% from their Oct. 9 record close of $209.05 -- and sit only about 1% above my new price.

My buy price climbed about 22%

My rule hasn't changed, but the quarters it counts have.

Palantir's third-quarter earnings per share came in at $0.44, up from $0.18 for the third quarter of 2025. With that year-ago quarter now out of the trailing total, the four quarters that count are the fourth quarter of 2025 ($0.24), the first two quarters of 2026 ($0.34 and $0.41), and the latest $0.44. Add them up, and Palantir earned $1.43 a share in the last year. That's around 22% above the $1.17 it had earned when I set the rule. And it's more than three times the $0.42 Palantir earned in the four quarters a year before.

At 120 times earnings, $1.43 a share works out to about $172.

The report also cleared both bars I set for it in an Oct. 31 piece. Revenue climbed 96% year over year to around $2.31 billion, topping the $2.3 billion I'd looked for. And Palantir's sales to American companies (its U.S. commercial revenue) climbed 148% to $984 million, well above the $930 million or so I'd flagged.

Is Palantir's profit growth slowing?

Granted, a buy price linked to earnings only keeps rising if earnings do. And at first glance, the latest quarter looks like a slowdown.

Compared with the quarter before, Palantir's earnings per share grew about 42% at the start of 2026, about 21% in the second quarter, and only about 7% in the third.

But most of that slowdown came from outside the software business itself. Palantir's operating income reached $1.085 billion, up around 19% from $912 million in the second quarter, for a 47% operating margin. It was also almost triple the $393 million the company made from operations in the year-ago quarter.

What weighed on the bottom line was other income, a number that's outside the company's operations. It went from a gain of around $92 million in the second quarter to a loss of about $26 million in the third. So net income rose only about 6% from the second quarter, but it was still up about 137% year over year to about $1.13 billion.

Management's forecast signals more growth. Palantir guided for fourth-quarter non-GAAP (adjusted) operating income of around $1.64 billion. That number is around 15% over the third quarter's $1.427 billion.

Once Palantir reports that fourth quarter, the $0.24 it earned at the end of 2025 leaves the trailing total. Even a flat fourth quarter, at $0.44 a share, would bring trailing earnings to $1.63 and my buy price to around $196.

Palantir stock is finally near my price

The gap has shrunk from both sides. In mid-October, my buy price was about 29% under the stock. Since then, the buy price has risen about 22%, while the stock has slid about 13%, from roughly $198 to around $173.

Yes, 120 times earnings is still a high price-to-earnings multiple, and at about $173, Palantir's price-to-earnings ratio stands near 121.

That valuation only makes sense if profits keep climbing. If earnings growth quarter to quarter stays in the single digits, my number might rise only slowly, and the stock could fall well below it.

But a company growing revenue 96% at a 47% operating margin doesn't look to me like one that's running out of profit growth.

So, for the first time since I set the rule, I think Palantir stock is worth considering. With shares only around 1% over my number, and likely to swing on either side of it, I'd build a stake slowly rather than buying in one shot.

Daniel Sparks and his clients do not have positions in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.