The software company that skeptics once dismissed as a government-contract niche player has just delivered a quarter that rewrites the narrative. Palantir Technologies posted a net profit of $1.07 billion in the second quarter — the first time it has crossed the billion-dollar mark on a GAAP basis — while revenue surged 93 percent to $1.94 billion, comfortably beating the LSEG consensus estimate of $1.80 billion. Earnings per share came in at 41 cents against analyst expectations of 35 cents.
Yet for all the strength in the numbers, the stock’s blistering advance over the past nine sessions has left the market wrestling with an uncomfortable question: is this a fundamental repricing, or simply a case of the market getting ahead of itself? The answer, as is often the case, appears to be a bit of both.
The Commercial Engine That Changed Everything
The real story beneath the headline figures is the acceleration of Palantir’s US commercial business, which grew 149 percent to $764 million in the quarter. Government revenue, meanwhile, rose 90 percent to $809 million. The value of outstanding US commercial contracts has more than doubled over the past year to $6.24 billion.
That expansion is being driven by a sales model that is unlike anything else in the software industry. Palantir’s AIP bootcamps — intensive training programs designed to bring prospective clients up to speed on its artificial intelligence platform — have now been run more than 1,300 times, with a closing rate of roughly 75 percent. The traditional 12-to-18-month enterprise sales cycle has been compressed to about a week.
The operational metrics tell a similar story. Palantir closed a record 220 deals worth at least $1 million during the quarter, including 98 transactions above $5 million and 70 above $10 million. The company’s Rule of 40 score — a measure combining growth and profitability — hit a best-ever 155 percent, while adjusted free cash flow reached $1.22 billion, translating to a 63 percent margin.
Guidance Raised, Targets Lifted
Management responded to the momentum by lifting its full-year 2026 outlook to between $8.150 billion and $8.158 billion in revenue, with the US commercial business expected to grow at least 134 percent to surpass $3.424 billion. Adjusted operating income is projected at $4.889 billion to $4.897 billion, with free cash flow of $4.5 billion to $4.7 billion. For the third quarter, the company guided to revenue of $2.160 billion to $2.164 billion.
CEO Alex Karp framed the results in characteristically grand terms, declaring that “the revolution for independence and AI sovereignty is now in full swing.” He added that customers had refused to become “vassal states of the language labs” — a swipe at the big AI model providers.
The analyst community responded with a flurry of target revisions. Citi’s Tyler Radke lifted his price objective from $200 to $245 with a Buy rating, citing accelerated revenue momentum and improved contract metrics. Deutsche Bank upgraded the stock from Hold to Buy, with analyst Brad Zelnick describing Palantir as operating “several steps ahead of the rest of the software industry” in converting AI demand into tangible customer value — calling the company a “time traveler.” Piper Sandler reaffirmed Overweight with a $230 target, while DA Davidson raised its target from $175 to $200.
Should investors sell immediately? Or is it worth buying Palantir?
Not everyone joined the celebration. Goldman Sachs held firm at Neutral with a $204 target, and Cantor Fitzgerald stayed neutral while nudging its objective from $138 to $156. On the bearish end, RBC and Jefferies maintain Underperform ratings with targets below €100.
A Market Split Down the Middle
The stock jumped 29.5 percent on Tuesday — just shy of its record single-day gain of 30.8 percent from February 6, 2024 — and kept climbing. By Friday’s close, shares stood at €148.84, up 9.88 percent on the day, bringing the nine-session advance to roughly 39 percent. Even after that surge, however, the stock remains 17.30 percent below its 52-week high of €179.98 reached in November.
The technical picture has become stretched. The 14-day relative strength index sits at 72.2, signaling overbought conditions, and the shares now trade 29.64 percent above their 50-day moving average of €114.81 — a gap that historically tends to close. With annualized 30-day volatility running at 100 percent, traders are bracing for potential turbulence. Should profit-taking emerge, the moving averages at €129.44 and €118.20 would serve as the key support levels to watch.
The consensus analyst target stands at €160.60, implying modest upside of about 7.9 percent from current levels — a far cry from the double-digit gains the bulls are projecting and the deep discounts the bears insist are warranted.
Skeptics Hold Their Ground
Notable dissenters remain unconvinced. Investor Michael Burry has maintained his short position against Palantir, a bet he established ahead of the first-quarter results in May. He has said he remains confident in his assessment over the coming years, valuing the core business in the low double digits. Cathie Wood’s ARK Invest, meanwhile, sold roughly 109,492 shares worth about $17 million on Tuesday and Wednesday, apparently as part of portfolio rebalancing following the sharp move. ARK still holds approximately 3.11 million shares valued at around $493 million, keeping it among the largest shareholders.
The company also faces reputational headwinds. Al Jazeera has reported on growing opposition to Palantir’s role in US immigration enforcement under the Trump administration, with critics linking the technology to unlawful deportations and deaths. The broadcaster also highlighted a £323 million contract awarded by the UK Ministry of Defence in January and a £444 million NHS agreement from 2023 that has drawn criticism over the handling of sensitive health data.
The Valuation Question That Won’t Go Away
What makes the current moment so fraught is the sheer distance between the optimists and the pessimists. Bank of America remains aggressively bullish with targets well above current levels, while the bears see fair value below €100. That chasm is not a statistical quirk — it is the market grappling with how much future growth should be priced in today.
The next earnings report is scheduled for November 2, with analysts currently modeling earnings of 36 cents per share. Between now and then, the debate over whether Palantir’s nine-day surge was a rational repricing or a case of overexuberance will likely be settled not by the fundamentals — which are now beyond dispute — but by whether the stock can hold its gains at these elevated levels. A pause, most observers agree, would be healthy. Whether the market delivers one is another matter entirely.
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