Palantir Technologies reported stronger-than-expected fourth-quarter results on Monday, sending its shares sharply higher in premarket trading as investors reacted to accelerating growth in both government and commercial demand for its artificial intelligence-driven software.
In premarket trading on Tuesday, Palantir shares rose about 11% after the company beat Wall Street expectations on earnings, revenue, and forward guidance, reinforcing its position as one of the most closely watched beneficiaries of rising AI spending.
Earnings beat and strong guidance lift shares
Adjusted earnings per share came in at 25 cents, above Wall Street’s consensus estimate of 23 cents and up from 14 cents a year earlier.
Quarterly revenue reached $1.41 billion, exceeding expectations of about $1.34 billion and marking a 70% year-on-year increase.
Chief executive officer Alex Karp said the company’s performance had surpassed even its own internal targets.
“Such a massive acceleration in growth, for a company of this scale and size, is a remarkable achievement — a cosmic reward of sorts to those who were interested in advancing our admittedly idiosyncratic project and embraced, or at least did not wholly reject, our mode of working,” Karp said.
Palantir also issued first-quarter and full-year 2026 guidance that came in well above current analyst projections, adding to the positive market reaction.
US commercial and government demand accelerates
Growth was especially strong in Palantir’s core US market, where sales rose 93% from a year earlier.
Commercial revenue stood out, jumping 137% year over year to $507 million, as large companies increased spending on AI tools to manage and analyze vast datasets.
Sales to the US government reached $570 million, up 66% from the prior year, pushing total US quarterly revenue above $1 billion for the first time.
Palantir’s software is used by a range of government agencies, including the Department of Defense, the Internal Revenue Service, and the Department of Homeland Security.
The company has continued to deepen its defense footprint.
In December, Palantir announced a new contract with the United States Navy worth up to $448 million.
Earlier, in July, it signed a software agreement with the US Army valued at up to $10 billion.
International revenue remains a weaker spot, though it still grew 22% year over year during the quarter.
Profitability improves, valuation debate continues
Palantir’s profitability metrics also strengthened.
The company posted a 41% operating margin in the fourth quarter and converted 47% of its 2025 sales into free cash flow.
It now holds more than $7 billion in cash and marketable securities.
Despite the strong results, valuation remains a point of debate among investors.
At a forward price-to-earnings multiple of around 145, Palantir is among the most richly valued stocks in the market, though still below Tesla’s multiple of roughly 206.
William Blair analyst Louie DiPalma said he was encouraged by the report.
“In our view, shares will trend back above $200 per share over the next year,” he wrote in a note to clients.
Palantir’s stock rose 135% in 2025 but entered 2026 under pressure, down about 17% year to date at Monday’s close after a broader pullback in software stocks linked to concerns over AI valuations.
Karp described the quarter as exceptional, telling CNBC that the results were “the best results that I’m aware of in tech in the last decade.”
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