The numbers coming out of Palantir Technologies this week were the kind that make even seasoned software investors do a double-take. Revenue jumped 93 percent to $1.94 billion, adjusted earnings per share landed at 41 cents against a consensus estimate of 35 cents, and the company’s US commercial business — the engine Wall Street has been watching most closely — surged 149 percent to $764 million. Cumulatively, that segment has grown 380 percent since the start of 2024.
Yet for all the headline-grabbing growth, the more telling development may be the one unfolding beneath the surface: a widening debate over whether the stock’s valuation has finally outrun even this pace of execution.
A Guidance Raise That Turned Heads
Palantir’s management didn’t mince words when it came to the outlook. The company now expects full-year 2026 revenue of $8.15 billion to $8.158 billion, a sharp upward revision from the prior range of $7.65 billion to $7.662 billion. The US commercial business is projected to exceed $3.424 billion, implying growth of at least 134 percent. For the third quarter, Palantir guided to revenue of $2.16 billion to $2.164 billion, with adjusted operating income of $1.292 billion to $1.296 billion.
The quarter itself was marked by deal flow that suggests momentum is broadening rather than concentrating. Palantir closed 220 contracts worth at least $1 million, including 98 above $5 million and 70 at $10 million or more. The pipeline in the US commercial segment has more than doubled to $6.24 billion in open contract value. Net income swung from $326.7 million to $1.06 billion year over year, while adjusted free cash flow reached $1.22 billion in the quarter alone. The company’s full-year free cash flow guidance now stands at $4.5 billion to $4.7 billion.
CEO Alex Karp, never one for understatement, framed the moment in characteristically grand terms during a CNBC interview, describing a “rebellion for independence and AI sovereignty” and predicting the current growth dynamic would persist for “at least another 18 months.” That’s a company expectation, not a guarantee — but the market has so far been willing to take him at his word.
Wall Street’s Mixed Signals
The analyst response was swift and largely bullish. Deutsche Bank’s Brad Zelnick upgraded the stock from Hold to Buy on Tuesday with a $200 price target, arguing that Palantir’s AIP platform is becoming a “control plane” for enterprises that want to deploy powerful AI models without surrendering proprietary data. Citi’s Tyler Radke followed the same day, lifting his target from $200 to $245 and citing accelerated revenue growth, record US commercial metrics, and improved contract quality. UBS, Northland, and D.A. Davidson also raised their targets this week, with the range now spanning $200 to $245 — all with Buy ratings.
But beneath the upgrades, there are signs of caution. Radke himself noted that Palantir trades at roughly 70 times expected revenue — a stretched multiple by any historical standard. The stock’s RSI sits at 72.2, a technically overbought reading. And despite the recent surge, shares remain 17.30 percent below their 52-week high of $179.98, having closed Friday at €148.84 in German trading after a 9.88 percent single-day gain. Over the past seven trading sessions, the stock is up nearly 40 percent.
UBS’s revised target of $220 is notable for another reason: it’s justified on roughly 44 times revised 2027 free cash flow, a sign that analysts are increasingly trying to value Palantir on future cash generation rather than pure revenue multiples.
Should investors sell immediately? Or is it worth buying Palantir?
The Skeptics Have Their Own Scorecard
Not everyone is leaning in. Cathie Wood’s ARK Invest reportedly exited its Palantir position on Thursday, reallocating capital elsewhere. Director Lauren Stat sold 3,032 shares on Wednesday at $165 apiece, totaling $500,280 — though the sale was executed under a pre-arranged automated trading plan established in February, which softens the signal somewhat.
The bear case extends beyond valuation. In the UK, the National Health Service is reportedly preparing to revise how it measures the success of Palantir’s data platform after staff uncovered errors in underlying statistics, according to a Financial Times investigation. Several hospital trusts have acknowledged data inaccuracies. The £444 million contract could face political pressure if an exit clause is triggered in early 2027 — a decision that hasn’t been made yet. Separately, several public-sector clients, including a New York hospital system, the Dutch defense ministry, and authorities in France and Denmark, have either declined to renew contracts or are actively seeking alternatives.
Palantir also lost 22 of 23 disputed points in a legal case against the Swiss investigative platform Republik. And a free open-source analytics tool called “World Monitor” briefly spooked investors with questions about government pricing, knocking the stock down around 6 percent at one point. Insider selling, according to regular filings, has also been trending toward more sales than purchases.
The Strategic Bet Behind the Numbers
What makes this quarter different from previous blowouts is the strategic positioning that accompanies it. Palantir’s pitch — that enterprises and governments can run powerful AI models without ceding control of their most sensitive data — has found a receptive audience at a moment when trust in foreign-controlled AI infrastructure is eroding. Deutsche Bank’s Zelnick captured this dynamic succinctly: the AIP platform is becoming the layer through which organizations exercise control over their AI deployments.
The company is also making moves in defense. Alongside Mercury Systems, Palantir plans to automate factory operations under a military-funded Tradewind prototype agreement built on its Foundry platform. And according to Reuters, Palantir is joining forces with Anduril, SpaceX, OpenAI, and other technology firms in a consortium aimed at challenging established Pentagon suppliers.
What Comes Next
The next test arrives with third-quarter results, expected on November 2. If Palantir delivers within its guided range, the valuation debate may recede into the background. If it stumbles, the conversation about that 70-times-revenue multiple will return with force.
The bull case rests on breadth: record Rule of 40 scores (155 percent), accelerating contract value, and a defense pipeline that keeps expanding. The bear case rests on a different kind of math — one where even extraordinary growth must eventually justify a price that already assumes years of flawless execution. Karp’s 18-month timeline is a bet the market is currently willing to underwrite. Whether it holds will depend on whether Palantir can keep converting its sovereignty narrative into the kind of numbers that make valuation debates feel academic.
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