Palantir's Next Big Test Isn't a Partnership—It's the Numbers

Key Points

• Palantir's new partnership with Knox Systems aims to accelerate the delivery of commercial software to federal agencies and defense customers.
• Palantir shares have rallied substantially since its second-quarter earnings report, but valuation concerns remain despite strong business growth.
• The company's Nov. 2 earnings report will test expectations for government revenue, commercial demand, and free cash flow.

Palantir Technologies NASDAQ: PLTR has been revalued since its Q2 2026 earnings report. The share price is up over 55% since the report, which has set a higher floor.

But investors are wondering about the ceiling. Valuation concerns still make investors wary of overpaying, even as the company keeps outperforming. Michael Burry has been one of the most outspoken Palantir critics and has initiated a short position on PLTR.

Deal flow argues in favor of the bulls. Palantir has steadily added clients to its commercial and government business units. The latter was in focus this week with the announcement of a partnership with Knox Systems. Knox runs a managed cloud built to get commercial software approved for federal use.

This partnership won’t settle the valuation debate because neither company disclosed financial terms. But it strengthens Palantir's position as a central player in government software delivery, not just one vendor among many.

That distinction matters with Q3 earnings expected on Nov. 2. Investors want proof that government growth can keep pace with Palantir’s surging commercial business.

What the Knox Deal Means in Plain English

Selling software to the federal government is different from selling to a corporation. Agencies can only use cloud products that pass strict security reviews. The main standard is FedRAMP, the Federal Risk and Authorization Management Program.

Defense work raises the bar further. The Pentagon uses Impact Levels to rate how sensitive data is. IL5 covers sensitive, unclassified data, including unclassified national security systems. Earning these approvals often takes a year or more. That cost keeps many strong commercial products out of government hands.

Knox helps address that problem by providing access to an already-authorized cloud environment. Software makers move into Knox’s cloud instead of building a compliant fortress themselves. Knox says it can deliver FedRAMP authorization in 90 days or less. It already hosts more than 100 AI and enterprise applications, including software from Adobe NASDAQ: ADBE.

Palantir has a similar model through its FedStart program. FedStart lets other software companies deploy on Palantir’s accredited infrastructure. In effect, vendors can use Palantir's existing security controls and accredited environment to accelerate the authorization process rather than starting from scratch.

The partnership links those two on-ramps. It targets customers with critical missions in FedRAMP and IL5 environments. One potential benefit is combining Knox's accelerated authorization process with Palantir's existing federal and defense infrastructure. However, neither company has spelled out the mechanics.

There's also a competitive wrinkle. Knox previously marketed one client’s authorization as giving agencies an alternative to Palantir. Now the two are partners. Palantir appears to be pulling a would-be rival’s channel into its orbit.

PLTR Tests Its Highs as Momentum Cools

The weekly chart shows why the floor feels sturdier. PLTR bottomed near $106 in June, then gapped higher after the Q2 report. That surge reclaimed the 50-week simple moving average, now near $157. The average has flattened and is starting to curl higher.

The stock is now testing resistance. It set a 52-week high near $213 in early October, edging past its November 2025 peak. A pullback followed, but this week’s gain of roughly 5.7% lifted shares back toward $200.

Momentum indicators send a mixed signal. The MACD line remains above its signal line and above zero, a bullish setup. But the histogram has shrunk for several weeks. Upward momentum is fading even as the share price holds up.

Volume adds a note of caution. Weekly volume has trended lower during the rally. Breakouts on light volume tend to be less reliable. Near-term support sits in the mid-$170s, with the 50-week average as a deeper floor.

It's About the Business More Than the Stock

PLTR rose about 4% the day Knox announced the deal. But the partnership alone doesn’t justify that move. Without specific financial terms, it's impossible to assess what the impact will be on either company.

The deal reinforces the idea that the application layer of AI is where Palantir's future growth could come from. Through its ontology, Palantir orchestrates that layer. Now it has turned a potentially competing FedRAMP channel into a partner.

The bull case for PLTR will come on Nov. 2 from the company's Q3 earnings report. Specifically, investors will pay attention to the company's free cash flow (FCF) growth. CEO Alex Karp has set an aggressive target for FCF in the next two years. Karp told CNBC in July that Palantir could generate $15 billion to $18 billion in FCF within two years.

For context, full-year 2026 adjusted FCF guidance stands at $4.5 billion to $4.7 billion. But he’s made bullish forecasts before, and the company has delivered. In 2022, Karp targeted $4.5 billion in 2025 revenue. Palantir delivered $4.475 billion.

Nobody is denying that the valuation of PLTR hinges on execution. The bulls and the bears simply have different opinions about the company's ability to deliver. Management guided Q3 revenue to $2.160 billion to $2.164 billion. A beat at the top end, plus any update on FedStart partners, would give bulls fresh ammunition.