Key Takeaways
- Palantir shares fell today after its third-quarter report, a week after ServiceNow had its biggest one-day drop on record following its own report.
- Palantir grew revenue 96% and raised its 2026 guidance well above expectations, but the total value of the contracts it booked grew just 6%.
- ServiceNow beat its own subscription revenue guidance but guided fourth-quarter cRPO growth down to 18.5%, which its CFO tied partly to more on-premises deals.
- ServiceNow looks like the better buy on the bad news because its forward P/E is less than half its five-year average, while Palantir is still priced for years of growth near today’s pace.
Palantir Technologies (PLTR) is down today after its third-quarter report, and the reason will sound familiar to anyone who owns ServiceNow (NOW).
Both just reported the same kind of bad news: what customers are signing for the future is growing more slowly than what they’re paying today.
ServiceNow had its biggest drop on record on Oct. 29, the day after its report, and is down 28% in a week. That leaves it about 40% below its 52-week high, while Palantir is less than 20% below its own.
That’s a much bigger punishment for a similar problem. And I think it makes ServiceNow the better buy.
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Palantir’s bookings fell behind
By almost every measure, Palantir had a spectacular quarter. Revenue rose 96% to $2.31 billion. That was its first quarter above $2 billion and well above the $2.18 billion analysts expected. U.S. commercial revenue jumped 148% to $984 million, passing U.S. government revenue for the first time, and adjusted operating margin was 62%.
It also raised its 2026 revenue guidance to $8.53 billion, up 91%. Analysts had expected $8.22 billion.
But total contract value grew just 6% to $2.92 billion, after 49% growth in the second quarter.
On Monday’s call, CEO Alex Karp described what he’s seeing in commercial as “much quicker interaction, much quicker to deployment, shorter duration of the contract, but then an ability to expand that contract dramatically.”
Shorter contracts would shrink total contract value even while customers spend more, so that’s a reasonable explanation.
The trouble is the price
Going into the report, analysts expected Palantir’s normalized EPS to more than quadruple, from $0.75 in 2025 to $3.43 in 2028.
And with guidance that far above consensus, I’d expect those estimates to go higher still.
Even so, Palantir trades at about 74x the $2.35 analysts expect it to earn in 2027. Even if it earns 2028’s $3.43, the stock still trades at about 51x that.
At that price, investors are counting on years more of growth near today’s pace. A quarter of 6% bookings growth gives them a reason to wonder.
ServiceNow’s slowdown is partly accounting
ServiceNow’s report followed the same pattern. Subscription revenue rose 20.5% in constant currency to $3.99 billion, above its own guidance, and cRPO grew 21% to $13.65 billion. Its renewal rate was 98%, AI net new ACV rose 65%, and it raised its year-end AI ACV target to $1.7 billion from $1.5 billion.
But adjusted EPS of $1.00 missed the $1.02 consensus, and ServiceNow guided fourth-quarter cRPO growth down to 18.5%. Its CFO put that down to “a higher mix of on-prem deals” and a growing backlog that cRPO doesn’t count.
Total RPO grew 22.5% to $29.7 billion, faster than cRPO, which fits that explanation.
Analysts still expect steady earnings growth, too. As of Nov. 2, after the report, they see ServiceNow’s normalized EPS rising from $3.51 in 2025 to $5.89 in 2028.
That’s about 19% a year, close to the 19% revenue growth analysts expect in 2027.
Still, the selloff left ServiceNow at 23x forward earnings as of Nov. 2. That’s less than half its five-year average of 53x and not far above its April low of 20x.
Palantir’s premium has a real case
Palantir is still the faster grower by a wide margin. Going into the report, analysts expected its revenue to grow 84% this year (it now guides to 91%) and 51% in 2027. For ServiceNow they expect 22% and 19%. Palantir’s 62% adjusted operating margin is also nearly double ServiceNow’s 32.5%.
Karp also argued on the call that demand isn’t the constraint: “people realize when it gets real, you need us. And that market is much larger than we can service.”
ServiceNow also carries a risk that Palantir doesn’t. If AI agents let customers do the same work with fewer people, they could pay for fewer seats, and a cRPO slowdown like this one would be the first sign. With a 98% renewal rate and AI ACV up 65%, I don’t see that happening yet, but I can’t rule it out.
ServiceNow is priced for the worst
Ultimately…if I’m buying one of these on bad news, it’s ServiceNow. Investors have already marked it down hard for a slowdown that management can partly explain. Palantir is still priced as if almost nothing will go wrong. If Karp is right that these shorter contracts expand dramatically, Palantir’s 6% will hopefully look like a blip, and its growth may well earn the premium.
ServiceNow still has to deliver, though. If fourth-quarter cRPO growth comes in below its 18.5% guide when it reports early next year, I’d stop giving management the benefit of the doubt on accounting. And Palantir’s fiscal 2027 guidance, expected in early February, will show us whether its bookings gap is really just about contract length.
So what is ServiceNow stock actually worth?
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Disclaimer:
Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any of the stocks mentioned. Thank you for reading, and happy investing!
