Palantir Technologies (PLTR) delivered a seismic earnings report this week, posting its highest-ever revenue and firmly cementing its place among the most talked-about companies in the AI software sector.
The company’s second-quarter revenue surged 48% year-over-year to just over $1 billion, blowing past Wall Street’s expectations of $939 million. Shares soared as high as 9.8% in Tuesday trading, hitting an all-time high of $176.33 before settling near $172 — a roughly 7% daily gain.
This milestone comes amid surging demand for Palantir’s artificial intelligence-driven data platforms, particularly in the United States. U.S. commercial sales grew an eye-popping 93% year-over-year, reaching $306 million, while U.S. government revenue climbed 53% to $426 million. In total, U.S. revenue rose 68% over the past year.
CEO Alex Karp didn’t hold back in characterizing the moment: “There’s no authentic way to be anything but have enormous pride and gratefulness about these extraordinary numbers,” he told investors. CTO Shyam Sankar added, “Our products were built for this moment — and the numbers show it.”
Palantir also raised its full-year revenue forecast to a range between $4.14 billion and $4.15 billion, well above prior analyst estimates of $3.91 billion.
AI Demand and Government Contracts Propel Growth
Palantir’s success this quarter was driven not only by commercial growth but also by major moves in the government sector. Last week, the company signed a landmark $10 billion, 10-year deal with the U.S. Army — consolidating 75 separate contracts into one. While this contract is designed to reduce government costs and won't immediately boost Palantir’s profit margins, it signals deeper and more enduring ties with the Pentagon.
Analysts say the U.S. government’s aggressive push into AI plays directly into Palantir’s strengths. The company’s software is used for everything from battlefield data integration to logistics planning and has become a cornerstone of defense AI infrastructure.
Palantir’s commercial success, especially in the U.S., reflects growing enterprise confidence in its AI-powered platforms. International performance, however, remained mixed. While international government revenue rose 37%, overseas commercial sales declined 3%.
Perhaps most impressively, Palantir is achieving these results while maintaining profitability. The company reported $269 million in GAAP operating income, translating to a 27% margin — metrics rarely seen at this stage of growth. More than half of its quarterly revenue converted to free cash flow, and the company now sits on a $6 billion cash pile.
The Valuation Question Looms Large
Despite the blockbuster quarter, Palantir’s valuation remains a flashpoint on Wall Street. The company trades at nearly 280 times forward earnings and over 80 times expected sales for the next year — valuations that dwarf nearly every peer in the software industry. Some analysts argue the current pricing is unsustainable, especially if growth cools in 2026.
“Palantir is trading at approximately 194 times forward-year free cash flow,” noted William Blair analyst Louie DiPalma, calling it an outlier even in a sector known for rich valuations.
Others are more bullish. Wedbush analyst Dan Ives called the earnings a “blowout across the board” and likened Palantir’s position in the AI race to “the Messi of AI.” He believes the company is on track to become a trillion-dollar name within two to three years, pointing to its leadership in both government and commercial sectors.
Even so, opinions on Wall Street remain split. Of 31 tracked analysts, just 10 currently rate the stock a Buy, while 16 are Neutral and five recommend selling. The stock has surged over 500% in the past year, dramatically outperforming both the broader S&P 500 and other tech giants.
A Star Performer With a Price Tag to Match
Palantir’s second-quarter results affirm its status as one of the fastest-growing and most profitable players in the AI software space. Its unique positioning — combining government trust, commercial traction, and robust AI tools — sets it apart from competitors like Snowflake, Oracle, and Microsoft.
Still, the valuation debate is unlikely to go away anytime soon. With a trailing P/E nearing 700 and an expanding chorus of skeptics warning of a potential cooldown, investors face a classic high-growth dilemma: how much is too much?
What’s clear is that Palantir isn’t slowing down. Whether Wall Street can keep up is another matter entirely.
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