Palantir Options Volume Vaults Above Tesla, Nvidia, After Earnings Beat

The surge came after the software company that derives almost half of its revenue from government contracts, saw its shares gapped 22% higher Tuesday as revenue climbed by almost a third, buoyed by what CEO Alexander Karp described as an "unrelenting AI demand that won't slow down."

Third quarter adjusted earnings of 10 cents per share surpassed Bloomberg consensus by 11%. That's the fifth straight time that Palantir beat estimates, according to data compiled by Bloomberg. Revenue has exceeded Wall Street expectations every quarter since it became a public company in 2020, data showed. The company raised its 2024 operating profit outlook to a range of between $1.05 billion and $1.06 billion, also above consensus.

The stock's 22% jump Tuesday to $50.69 took gains over the past six months to more than 117%. The rally and the latest financial reports put the stock price at 135.53 times estimated earnings for the end of 2024, according to data compiled by Bloomberg. That's a pricier valuation compared to Nvidia, which has a forward PE ratio of 49 times, and Tesla's 104 times.

That explains why only 20% of the analysts who tracks Palantir have a buy rating on the stock, while 30% have a sell recommendation. The rest say hold. In contrast, 89% of the analysts who track AI-darling Nvidia have a buy rating on the stock and just 2.7% say sell.

The heaviest volume so far are in call options that give the holders the right to buy Palantir shares at $50 in three days, with 76,740 contracts changing hands so far. The price of those calls soared 81% as the stock price rally pushed the contract in-the-money.

Can the share price rally keep going? Share your thoughts on Palantir and how its fundamentals compare with AI-darling Nvidia in the comments section. And if you have a price forecast for Palantir, please vote below.