Palantir's Moment of Reckoning: Blowout Growth, a Founder's Ukraine Bet, and Questions That Won't Settle

Palantir's Q2 revenue jumped 93% to $1.94B, but stock trades 13% below its high. Pentagon authorization and Karp's Ukraine investment add complexity.

The numbers coming out of Palantir's second quarter were the kind that make other software companies blush. Revenue surged 93 percent to $1.94 billion, the US commercial arm nearly two-and-a-half-bagged with 149 percent growth to $764 million, and management raised full-year guidance to $8.15–8.16 billion — an 82 percent jump that CEO Alex Karp described with a word rarely heard in earnings calls: "otherworldly." Non-GAAP earnings per share climbed 215 percent, and the company's "Rule of 40" score — revenue growth plus margin — hit a staggering 155.

Yet the stock, which has added roughly 43–44 percent over the past 30 days, is still trading about 13 percent below its all-time high of €179.98, set in early November. At €156–158, investors are wrestling with a paradox: a company delivering unprecedented operational momentum while the market debates whether the optimism has already been priced in.

Karp's Personal Pivot to Kyiv

Away from the balance sheet, Palantir's co-founder is making headlines of a different sort. Mykhailo Fedorov, Ukraine's former defense minister, announced that Karp will become the first major investor in a new Ukrainian defense venture focused on robotics, AI-guided missiles, and drones. The two met in Washington on Tuesday to formalize the arrangement.

This deepens Karp's personal footprint in Ukraine's defense industry at a moment when Palantir's institutional role there is already significant — Ukrainian forces rely on Palantir systems and Starlink for drone operations, though some officers have voiced unease about potential US shutdown risks. The entanglement cuts both ways: it fuels growth but also exposes the company to geopolitical and reputational headwinds, particularly in Europe, where Palantir faces mounting scrutiny over its tax practices and public procurement wins.

The Pentagon's Quiet Green Light

The most consequential development for the growth narrative may be unfolding inside the Pentagon. According to The Register, defense officials have prepared a memo that would allow military units to procure Palantir services worth up to $243.9 million without competitive bidding through the end of March 2027. The Maven Smart System — the AI defense platform driving Palantir's defense segment — is on track to reach $1 billion in annual recurring revenue, per a William Blair analyst.

That said, the memo is an authorization, not a contract. Whether those dollars actually flow remains an open question, and the distinction matters for a stock trading at 73 times sales and 264 times earnings.

Bulls, Bears, and a Founder's Confidence

The bull case rests on breadth. Total contract value in the second quarter rose 49 percent to $3.37 billion, with a record $2.13 billion coming from US commercial clients alone. Palantir's "sovereignty bootcamps" — nearly 200 organizations have participated, according to Forbes — point to growing international demand for AI sovereignty offerings, and a second bootcamp was announced in mid-August. Karp's guidance that the momentum will persist "for at least another 18 months" gives the story a multi-year runway if the Pentagon authorization converts into real orders.

The bear case is more subtle but persistent. Cathie Wood's ARK Invest has been steadily trimming its position — roughly $17 million sold immediately after the earnings pop, another $27.2 million on August 21, and about $26 million more in late August. Whether that's profit-taking after a record rally or a signal that even committed growth investors see the valuation as stretched is a matter of interpretation. The stock's 97 percent annualized volatility doesn't help: Tuesday's 2.9 percent dip to €156.06 followed a 1.8 percent decline the prior session, and moves like that can accelerate quickly.

The European Question

Palantir's European expansion carries its own complications. The company reported an effective tax rate of just 1.4 percent on $1.66 billion in pre-tax profit for 2025 — a figure that has drawn criticism amid reports that EU procurement practices have channeled public funds to the company. In the UK, Palantir has secured contracts worth at least £670 million, nearly half from the National Health Service. The European Commission is scheduled to reform its procurement guidelines on September 9, a move that could reshape Palantir's public-sector pipeline in the region.

What Comes Next

The immediate test is the third quarter, where Palantir has guided to revenue of $2.16–2.164 billion. If the company delivers on that and the Pentagon authorization translates into meaningful contract flow, the recent pullback may prove to be a pause rather than a turning point. If US commercial momentum falters or ARK's selling presages broader institutional rotation, the distance to that November high could widen further.

Analysts remain divided: the median price target across 36 covering firms sits at $205, though at least one Fool.com contributor sees $222 — roughly 20 percent upside from recent levels. The gap between those figures and the stock's current price reflects the central tension: Palantir is delivering numbers that justify enthusiasm, but the valuation leaves little room for error. Karp's personal bet on Ukraine adds a new layer of complexity — one that will keep the debate alive well into the fall.