Palantir Technologies shares surged more than 27% Tuesday, trading at $159.74 as of 11:49 a.m. Eastern time, after the AI software company posted second-quarter results that far exceeded Wall Street expectations and sharply raised its full-year revenue guidance, marking the stock’s best single-day gain in more than a year.
The rally, which pushed shares up as much as 27.13% during Tuesday’s session, reversed a stretch of declines for Palantir earlier this year tied to broader investor anxiety over the sustainability of AI-related spending across the technology sector.
A quarter Karp called ‘otherworldly’
Palantir reported second-quarter revenue of $1.94 billion, up 93% from roughly $1 billion a year earlier and well ahead of analyst estimates of $1.8 billion, according to data compiled by LSEG. Adjusted earnings per share came in at 41 cents, comfortably topping Wall Street’s expectation of 35 cents. Net income roughly tripled during the quarter, with Palantir crossing $1 billion in quarterly profit for the first time in the company’s history.
Chief Executive Alex Karp did not hold back in describing the results. “This quarter was otherworldly,” Karp said in a statement, pointing to the company’s surging commercial business and describing rising demand for what he called AI sovereignty, the ability of companies and governments to keep their data private from major AI developers, as a defining driver of the quarter’s performance.
Commercial and government revenue both surge
Palantir’s U.S. commercial revenue jumped 149% year-over-year to $764 million, while U.S. government revenue climbed 90% to $809 million, underscoring broad-based strength across both sides of the company’s business. Total contract value rose 49% year-over-year to $3.373 billion, while U.S. commercial total contract value specifically surged 153% to $2.132 billion.
The company’s remaining deal value within its U.S. commercial segment, representing the value of contracts still awaiting fulfillment, jumped 124% year-over-year and 27% quarter-over-quarter to $6.24 billion, a figure analysts pointed to as evidence that Palantir’s growth trajectory remains firmly intact heading into the second half of the year.
Profitability metrics also impressed
Beyond top-line revenue growth, Palantir posted GAAP operating income of $912 million, representing a 47% operating margin, while adjusted operating income reached $1.194 billion, translating to a 62% margin. The company generated operating cash flow and adjusted free cash flow of $1.2 billion during the quarter, a 63% margin, while its Rule of 40 score, a common measure of software company financial health that combines growth and profitability, climbed to 155%, far above the 40% threshold typically viewed as a sign of strong performance. Palantir ended the quarter with $9.4 billion in cash and equivalents.
The company also disclosed strong deal activity during the quarter, closing 220 deals worth at least $1 million, including 98 deals worth at least $5 million and 73 deals worth at least $10 million.
A dramatically raised outlook
On the strength of those results, Palantir significantly raised its guidance for the remainder of the year. The company now expects full-year 2026 revenue between $8.15 billion and $8.158 billion, up sharply from its previous guidance range of roughly $7.65 billion to $7.66 billion, implying annual growth of approximately 82%, up from the 71% growth rate management had forecast just one quarter earlier. Palantir also raised its full-year adjusted operating income guidance to between $4.889 billion and $4.897 billion, along with adjusted free cash flow guidance of $4.5 billion to $4.7 billion.
For the third quarter specifically, Palantir guided toward revenue of $2.160 billion to $2.164 billion, above the roughly $2 billion analysts had been expecting, along with adjusted operating income of $1.292 billion to $1.296 billion.
Karp defends the company’s growth trajectory
During the company’s earnings call, Karp struck a confident tone about Palantir’s position relative to the broader software industry, arguing that few companies operating at Palantir’s scale have posted comparable growth rates. He also expressed confidence that the current pace of expansion has room to continue, suggesting the company’s growth trajectory could persist for at least another year and a half. In a letter to shareholders, Karp framed the company’s growth around demand for what he described as AI independence, arguing that customers have increasingly sought to avoid becoming overly reliant on major AI language model providers.
Wall Street responds positively
Analysts at Citi were among those reacting favorably to the results, writing in a note that Palantir’s performance helps weaken the broader bear case around rising competition in the AI software space, arguing that the company’s focus on data privacy and sovereignty sets it apart from rivals building on top of major AI labs’ infrastructure.
A boost for Karp personally
Tuesday’s rally also had a direct impact on Karp’s personal wealth. His net worth rose by an estimated $2 billion during Tuesday’s trading, pushing his total estimated net worth to roughly $14.2 billion, according to tracking of the stock’s movement. Karp co-founded Palantir alongside several partners, including fellow billionaire Stephen Cohen, and the company became publicly traded on the New York Stock Exchange in 2020 through an unconventional direct listing process rather than a traditional initial public offering.
A notable weak spot
Despite the overwhelmingly positive results, the company’s international business emerged as one of the few relatively soft spots in an otherwise strong report, with growth outside the U.S. lagging behind the explosive gains seen domestically across both Palantir’s commercial and government segments.
With Tuesday’s surge marking Palantir’s largest single-day stock move in more than a year, investors will be watching closely in the coming quarters to see whether the company’s dramatically raised guidance holds up, particularly as broader questions continue to swirl around the pace and sustainability of enterprise AI spending across the technology sector. For now, Tuesday’s results appear to have significantly bolstered confidence among both Wall Street analysts and Palantir’s own leadership that the company’s rapid growth trajectory remains firmly on track heading into the back half of 2026.
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