Palantir $Palantir Technologies Inc.(PLTR)$ released its latest Q2 earnings yesterday, and the stock surged nearly 8% after the report. Over the past 12 months, Palantir's share price has skyrocketed more than 600%, making it one of the top-performing stocks in the entire U.S. market. So what exactly did this latest earnings report reveal? Why has the stock been on such a tear? And more importantly—has the valuation already priced in too much?
Source: Google Finance
Palantir’s Journey: From Covert Ops to AI Platform Powerhouse
Palantir Technologies $Palantir Technologies Inc.(PLTR)$ is a U.S.-based software company that helps clients integrate data, decision-making, and operations at scale. Its software primarily serves government agencies and commercial enterprises. Founded in 2003 by a group that includes Peter Thiel—PayPal $PayPal(PYPL)$ co-founder and the first outside investor in Facebook $Meta Platforms, Inc.(META)$ —Palantir first came into the public spotlight when its software helped the CIA locate Osama bin Laden. Later, it played a key role in assisting financial institutions recover billions lost in Bernie Madoff’s Ponzi scheme.
Palantir went public in 2020 as a unicorn, but for several years after listing, it struggled to exceed investor expectations. While the company continued to grow steadily in government and defense sectors, its commercial traction remained modest and the stock price stayed relatively flat.
That changed dramatically in 2024, when the AI boom gave the company a new lease on life. Palantir’s launch of its Artificial Intelligence Platform (AIP) was met with overwhelming demand from enterprises. Thanks to its deep experience serving government and defense clients—who require precision, speed, and security—Palantir's AI tools were seen as some of the most reliable and effective on the market. That reputation has since translated into widespread adoption, accelerating both its revenue growth and share price performance.
Q2 Earnings Blow Past Expectations
In Q2 2025, Palantir’s revenue jumped to $1.004 billion—up 48% year-over-year and 14% quarter-over-quarter.
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Commercial revenue rose 47% YoY, while government revenue increased 49%.
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Total customer count grew 43%, and enterprise customers rose by 48%.
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The company closed 157 deals over $1 million, including 66 over $5 million and 42 above $10 million.
Source: Palantir Q2 Earnings
U.S. business led the charge:
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U.S. revenue jumped 68% YoY and 17% QoQ.
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Commercial revenue in the U.S. soared 93%, while customer count grew 64%.
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Government revenue increased 53%, including a $10 billion consolidated contract with the U.S. military.
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Remaining deal value (RPO) surged 145% YoY.
Source: Palantir Q2 Earnings
Profitability also saw major improvement:
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Adjusted operating margin reached 46%.
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The combined figure of revenue growth + operating margin (a.k.a. Rule of 40) hit 94%—well above industry standards.
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Net income jumped 144% YoY, with adjusted EPS of $0.16, beating estimates of $0.14.
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Free cash flow reached $569 million, with a strong FCF margin of 57%.
Palantir also raised its full-year guidance across the board:
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Revenue forecast lifted by 6% to $4.14–4.15 billion;
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Adjusted operating profit raised by 12% to ~$1.92 billion;
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Free cash flow guidance raised by $200 million to $1.8–2.0 billion.
Source: Palantir Q2 Earnings
The blowout quarter and upgraded outlook sent shares up nearly 8% after the announcement.
What’s Driving the Stock So Hard?
Palantir’s meteoric rise isn’t just hype—it’s backed by some real fundamentals.
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Its platform is deeply productized and modular, making it easy to deploy across industries with high stickiness.
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Years of serving government and military clients means the company’s tech has been stress-tested under extreme conditions.
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AIP combines data integration, model deployment, real-time monitoring, and decision automation—making it one of the most complete AI ops platforms available today.
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Even now, Palantir serves fewer than 700 enterprise customers globally—with 70% of them in the U.S.—which means there’s still massive growth runway, especially internationally.
But Has the Market Gone Too Far?
As strong as the business is, Palantir’s valuation is in nosebleed territory:
Even under super-bullish assumptions—say 50% annual revenue growth for 5 years, 40% net margin (well above industry average), and a generous 50× P/E multiple—the fair value would still only be around $115/share. That suggests the current price is heavily front-loaded with future expectations.
That said, we’re also in a rate-cutting environment, the company continues to post eye-popping results, and Palantir now has a loyal investor base. So unless there's a major negative surprise, the stock may remain resilient in the short term, even if a pullback eventually materializes.
Invesight Viewpoint
Palantir is rapidly delivering on its promise to be a next-gen AI platform with military-grade precision and commercial scalability. While valuation concerns are real—and the stock is certainly priced for perfection—it’s also hard to ignore the company’s consistent execution and massive market potential.
Ultimately, the stock’s future path will be defined by a delicate balance between continued earnings delivery and how long the market remains willing to believe the hype.
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