Palantir's Explosive Quarter Reopens the Great Valuation Debate

Palantir's Q2 revenue jumps 93% to $1.94B, US commercial up 149%, stock rallies 29% but remains 20% below highs.

The numbers were so strong that even the CEO reached for a word rarely heard in earnings calls. Alex Karp called Palantir's second-quarter results "out of this world" — and the market responded in kind. The stock surged 29.11% to close at 141.12 euros, adding to a seven-day run that has now pushed the shares up 33%. At 143.22 euros, the question hanging over Palantir is no longer whether the growth story is real, but whether the price has finally caught up to it.

The Numbers That Changed the Conversation

Revenue jumped 93% year over year to $1.94 billion, blowing past the $1.81 billion analysts had penciled in. Earnings per share came in at $0.41 on both a GAAP and adjusted basis, against consensus expectations of just $0.34. The company also raised its full-year guidance to $8.16 billion in revenue, up from a prior range of $7.65 to $7.66 billion, and lifted its 2026 US commercial forecast to more than $3.42 billion from $3.22 billion.

The headline figure driving the debate is the 149% growth in Palantir's US commercial segment, which reached $764 million. Government business expanded 90% to $809 million, pushing total US revenue up 115% to $1.57 billion. Operating margin hit 47% on a GAAP basis, and adjusted free cash flow climbed to $1.22 billion. By the "Rule of 40" metric — a standard for efficient growth — Palantir scores a remarkable 155%, far above the threshold that signals healthy expansion.

A Comeback, Not a Breakout

Context matters here. Before the earnings release, the stock had been trading at $122.78, roughly 40% below its all-time high of $207.52 set in November 2025. The recent rally, while eye-catching, has only partially closed that gap. The shares remain 8.85% below their year-to-date starting point and still sit 20.42% under the 52-week high of 179.98 euros. This is less a new leg up than a forceful rebound from a deep drawdown — the stock is currently 51.25% above its June low of 93.30 euros.

The new business engine is clearly accelerating. Palantir signed 220 contracts worth at least $1 million each, including 73 deals exceeding $10 million. Total contract value rose 49% to $3.37 billion. Most tellingly, remaining deal value in the US commercial segment more than doubled to $6.24 billion, up 124%. The company's "AIP Bootcamps" — intensive onboarding sessions designed to embed its AI platform directly into corporate workflows — appear to be converting pilots into production-scale deployments.

The Bull Case: Sovereignty and Scale

Analysts see a structural tailwind in what observers call "AI sovereignty" — the growing demand from large enterprises for data control and security in their AI deployments. Palantir has positioned itself as a primary beneficiary of this trend. UBS and Piper Sandler have both raised their price targets, with some now reaching as high as roughly 196 euros.

The consensus target stands at 158.07 euros, implying about 10% upside from current levels. The stock's distance from its November 2025 peak — the 52-week high of 179.98 euros — suggests room to run if growth holds. The backlog conversion rate will be the key metric to watch: if the $6.24 billion in US commercial deal value converts to revenue at anything close to current velocity, the bull thesis gains considerable weight.

The Bear Case: Perfection Already Priced In

The technical picture, however, tells a more cautious story. The 14-day relative strength index sits at 72.9 — a level that historically signals overbought conditions and elevated correction risk. Annualized 30-day volatility of 96.16% underscores how much of the recent move has been driven by momentum and short covering rather than fundamentals alone.

The stock now trades 24.01% above its 50-day moving average and 8.60% above the 200-day average. That leaves little margin for error. Skeptics argue the valuation is "priced for perfection" — any disappointment, whether in the international business (which continues to lag US growth) or in government contract renewals, could trigger a sharp pullback. The 90% growth in government revenue carries its own risk: public contracts face political scrutiny, and renewals are never guaranteed.

Adding to the caution: institutional investors such as ARK Invest have recently trimmed positions. Should other large holders take profits after the 23.61% gain over the past 30 days, the overbought conditions could quickly translate into selling pressure.

What Happens Next

The immediate technical picture suggests consolidation. As long as the stock holds above its 200-day average of 129.82 euros, the chart favors a continued drift toward the consensus target. A sustained close above 150 euros would signal that the market is ready to close the gap to the 52-week high. In the near term, the most likely scenario appears to be a trading range between 135 and 145 euros given the elevated volatility.

The real test comes in November, when Palantir reports third-quarter results. The raised guidance — particularly the $3.42 billion US commercial target — will face its first serious examination. A sharp deceleration from the 149% growth rate, or renewed turbulence around government contracts, could turn the overbought technical position into a more serious correction. A pullback to the 50-day average at 114.39 euros is not out of the question if sentiment sours.

For now, the bulls have the momentum — and the numbers — on their side. But with the stock still down for the year despite this week's fireworks, Palantir has yet to prove it can sustain this trajectory. The November report will show whether this quarter marked a genuine inflection point or merely a spectacular rebound within a longer consolidation.