Why Palantir stock doesn't deserve to be caught up in the AI stock meltdown

Palantir's ( PLTR ) stock is being heavily defended post-earnings on Tuesday, as shares sell off 6% pre-market amid a broader meltdown in the AI trade.

Wall Street is probably right to stick its neck out on Palantir after the type of quarter it reported late Monday.

"Palantir reported another outstanding quarter with results coming in well above expectations as revenue growth accelerates further due to parabolic US demand for AI solutions. The growth thesis behind Palantir's commercial segment has manifesterd as commercial revenue surpassed government for the first time. We continue to believe Palantir is the best story in all of software," said D.A. Davidson analyst Gil Luria.

The Alex Karp-led software play hit all the bullish notes in the third quarter, unlike hyperscalers such as Amazon ( AMZN ), which have sparked a fresh tech stock rout.

Revenue growth accelerated to 96% from 93% last quarter. US commercial segment sales exploded 148% year over year. US government sales accelerated to 96% from 90% previously.

Sales and earnings beat elevated analyst estimates.

Meanwhile, full-year adjusted operating profit guidance was hiked by $354 million to $5.247 billion.

And to top it all off, in a market nervous about tech free cash flow, Palantir lifted its free cash flow guidance by $300 million to $4.9 billion.

There wasn't much more Palantir could do here to fight off the bear raid on tech stocks !

"Looking ahead, the shape of this quarter is what reinforces our view that 2027 is the inflection year for AI monetization, and Palantir remains our top pick in software," Yorkville Ives partner Dan Ives said.

Brian Sozzi is Yahoo Finance's Executive Editor, host of the Sozzi Unleashed morning show, the ' Power Players With Brian Sozzi' podcast and a member of Yahoo Finance's editorial leadership team.