Political Scrutiny Intensifies for Palantir Amidst Strong AI Demand

Palantir reports surging AI revenue but faces political fire for paying $0 in U.S. federal income tax, alongside governance and contract controversies.

While the artificial intelligence sector received a powerful vote of confidence from chipmaker Nvidia's stellar results, data analytics firm Palantir Technologies found itself navigating a wave of political and public relations challenges this week. The company's shares, which have declined approximately 38% from their all-time high, faced renewed scrutiny unrelated to its core financial performance.

Strategic Momentum and Robust Financials

The broader AI investment thesis gained substantial backing from Nvidia's latest quarterly report. The chip giant announced record revenue of $68.1 billion, a year-over-year increase of 73%. Its data center business, widely viewed as a bellwether for AI infrastructure spending, surged 75% to $62.3 billion.

This environment of robust enterprise demand is reflected in Palantir's own figures. For the fourth quarter of 2025, the company reported a 70% revenue increase to $1.4 billion, propelled by a 137% jump in its U.S. commercial business to $507 million. A key forward-looking indicator, remaining performance obligation, soared 143% to $4.21 billion.

Furthering its operational momentum, Palantir recently announced a partnership with Rackspace Technology in mid-February. The collaboration aims to drastically shorten deployment times for Palantir's Foundry platform and AI systems for enterprise clients—from months down to weeks. Rackspace will handle data migration and implementation using pre-configured security and compliance modules.

Political Firestorm Over Tax Practices

Despite these strong operational metrics, Palantir is drawing significant political criticism. U.S. Senator Bernie Sanders publicly singled out the company, alongside Tesla and Live Nation, for paying zero U.S. federal income taxes despite reporting substantial profits. According to its financial statements, Palantir recorded U.S. income of $1.5 billion in the fourth quarter but utilized research and development tax credits, among other mechanisms, resulting in a net federal tax payment of $0.

This criticism introduces an additional layer of reputational risk for the stock, which is already contending with a significant valuation recalibration this year.

Governance and Contract Controversies

Simultaneously, Palantir is relocating its corporate headquarters from Denver to Miami. This move occurs against a backdrop of ongoing discussions concerning corporate governance, specifically around the reimbursement of private jet expenses for Chief Executive Officer Alex Karp.

Separately, a controversy is brewing in New York City, where activist groups are urging municipal officials to terminate a contract worth nearly $4 million with Palantir. The agreement involves optimizing the billing system for NYC Health + Hospitals. While the financial value of the contract is immaterial to Palantir, the dispute touches on sensitive issues of healthcare data privacy and public perception. The hospital network has emphasized that no patient data is shared outside the contractual framework.

Valuation and Outlook Remain Elevated

Even after its recent pullback, Palantir commands a market capitalization of approximately $308 billion. The company's revenue guidance for 2026 targets between $7.18 billion and $7.20 billion, representing growth of about 61%. Within that, U.S. commercial revenue is projected to rise at least 115% to over $3.14 billion. The company's GAAP operating margin stood at 41% in the last quarter.

The upcoming quarterly results, expected in early May, will be a critical test of whether its Artificial Intelligence Platform (AIP) can sustain its high growth trajectory. While demand-side indicators, confirmed by Nvidia's performance, appear solid, the path forward is complicated by political attacks, governance debates, and public contract controversies.