Palantir Technologies (NASDAQ:PLTR) saw its shares surge more than 20% in Tuesday trading after the company delivered second-quarter results that comfortably exceeded Wall Street forecasts, prompting a wave of analyst price-target hikes and at least one upgrade.
The Denver-based software firm reported adjusted earnings per share of $0.41, well above the $0.34 consensus estimate and sharply higher than the $0.16 reported in the year-ago period. Revenue climbed 93% year over year to $1.9 billion, topping expectations of $1.8 billion. Adjusted operating margin expanded to 62%, up from 46% a year earlier and ahead of the 60% projection.
Management also issued better-than-expected guidance for the current quarter and raised its full-year 2026 outlook, reinforcing optimism around the company's artificial intelligence business. Chief Executive Officer Alex Karp described the performance as "otherworldly," highlighting that U.S. commercial revenue grew 149% year over year during the quarter.
Analysts turn more bullish after AI-driven beat
The earnings report triggered a flurry of analyst commentary, with several firms becoming more constructive on the company's long-term prospects. William Blair analyst Louie DiPalma said the results have shifted the narrative surrounding the company.
"The stellar performance defies concerns that competition with Anthropic and OpenAI is intensifying for enterprise AI workflows," DiPalma wrote. He added that no other public software company or defense contractor combines the same level of revenue growth and profitability. DiPalma maintained an Outperform rating and sees upside toward the $200 range over the next year.
Deutsche Bank upgraded Palantir to Buy from Hold while maintaining its $200 price target. The brokerage said Palantir is "operating several steps ahead" of the broader software sector in translating AI demand into customer value. Deutsche Bank also argued that the stock's valuation appears "even more reasonable" following the quarterly results, adding that current levels do not fully reflect the company's "unparalleled Rule of 155 profile" or its long-term enterprise AI opportunity.
Cantor Fitzgerald maintained a Neutral rating but increased its price target to $156 from $138. "We continue to believe Palantir remains a leading beneficiary of secular AI growth trends," analyst Thomas Blakey wrote.
Not all analysts turned more bullish. Jefferies raised its price target to $80 from $70 while maintaining an Underperform rating, citing tougher growth comparisons ahead and moderating international expansion. Morningstar assigned a fair value estimate of $153, noting that "high expectations are embedded" in the stock and warning there is "little margin for error."
U.S. commercial business drives growth
Palantir's strongest momentum continued to come from the United States, particularly its commercial business. The company reported that U.S. commercial revenue increased 149% year over year, while U.S. government revenue rose 90%. Although government contracts remain Palantir's largest business, the commercial segment is narrowing the gap as more enterprises adopt the company's software to organize proprietary data and deploy AI applications.
International growth remained positive but lagged the domestic business, with revenue outside the United States increasing 33%. In his shareholder letter, Karp reiterated his criticism of leading AI model developers while emphasizing the importance of enterprise control over proprietary data.
"Every organization in the world is awakening to the risks of handing the creators of the language models the keys to their institutions, of letting the models loose within their homes," he wrote. "The models have grown and thrived by essentially ingesting the entire written work product of our civilization. And those models, as well as their creators, now have their sights set on global industry."
The strong results also helped lift broader market sentiment, with Dow futures climbing on the AI rally and Palantir's Rule of 40 hitting 155 as guidance was raised. Investors will be watching whether the stock can sustain its momentum amid elevated valuation concerns.
This article is for informational purposes only and does not constitute financial advice.
