Palantir's Two-Front Battle: Record Growth Meets a Gathering Political Storm

Palantir's stellar growth faces mounting political opposition and overbought technicals, with analysts split on valuation.

The numbers keep getting bigger. So do the headaches.

Palantir's latest quarterly report delivered the kind of growth most software companies can only dream of — revenue up 93 percent to $1.94 billion, with US commercial sales surging 149 percent and government contracts climbing 90 percent to $809 million. Management responded by lifting full-year guidance to roughly $8.15 billion, while touting a "Rule of 40" score of 155 percent, powered by that 93 percent top-line expansion and a 62 percent adjusted operating margin.

Yet for all the financial fireworks, a different kind of pressure is building — one that strikes at the very heart of Palantir's business model.

The Political Pushback Intensifies

In London, Mayor Sadiq Khan has blocked a £50 million contract between Palantir and the Metropolitan Police over procurement rule violations. The company is fighting the decision in court, according to media reports, turning what might have been a routine administrative dispute into a very public legal battle.

The resistance extends well beyond the UK capital. European trade unions and researchers are calling for reviews of existing contracts, pointing to what they describe as aggressive tax avoidance strategies and highlighting British government deals worth £670 million. Across the Atlantic, 31 unions representing nearly 800 journalists demanded on Monday that USA Today immediately terminate its new partnership with Palantir, citing concerns over data exploitation and reader privacy.

None of these disputes touch the core financials directly. But they cut to the heart of Palantir's growth engine, which remains heavily dependent on government and institutional contracts. The question investors now face: at what point does reputational friction start translating into lost business?

A Stock That Can't Decide What It Wants to Be

The market's reaction to earnings has been characteristically erratic. The stock jumped 30.74 percent in the 30 days following the report, pushing the 14-day RSI to 70.5 — a classic overbought reading. The secondary article puts the RSI at 73.2, with the shares trading 31.23 percent above their 50-day moving average. Either way, the technical picture screams stretched.

The stock closed at €151.56, down 0.14 percent on the day, and currently trades around €149.28, off 1.50 percent. With annualized volatility at a staggering 97.85 percent, even modest disappointments could trigger outsized swings.

The analyst community is split down the middle. The bulls came out swinging in mid-August: Piper Sandler reaffirmed a $230 price target on August 11, Truist Securities raised to $223, UBS to $220, and Phillip Securities to $215 — all citing commercial acceleration and demand for "sovereign AI." Cantor Fitzgerald, by contrast, sits at "Neutral" with a far more conservative $156 target, while Benchmark maintained a "Hold" purely on valuation grounds. The consensus target sits at €164.53, implying roughly 10 percent upside from current levels.

Insiders Vote With Their Wallets

The most telling signal may be coming from those closest to the company. Over the past 90 days, Palantir insiders have sold 1.15 million shares worth a combined $156.2 million. That follows a pattern of notable transactions: CTO Shyam Sankar offloaded 35,000 shares on August 6 for approximately $5.45 million, and director Lauren Elaina Friedman Stat sold 3,032 shares in early August — both through automated trading plans, but notable nonetheless.

Cathie Wood's ARK Invest has also been trimming, selling roughly $17 million worth of stock after the earnings pop. Meanwhile, institutional buyers like Defender Capital and Sage Capital Advisors added positions in the second quarter. The divergence between those building and those exiting could hardly be starker.

The Tax Question That Won't Go Away

Palantir's expansion has also drawn scrutiny over its tax practices. A report from the organization CICTAR alleges the company's global tax rate stands at just 1.4 percent. More pointedly, Palantir paid no US federal tax in 2025 despite its heavy reliance on government contracts — a fact that sits awkwardly with its image as a patriotic defender of Western interests.

CEO Alex Karp, for his part, continues to position the company as the antidote to what he calls a "vassal state" model of AI dependence, taking direct aim at rivals like OpenAI and Anthropic. The rhetoric resonates with government and commercial clients alike, but it also keeps the company squarely in the crosshairs of debates over its role in international conflicts, particularly in Israel.

What to Watch Next

The company has laid out third-quarter guidance of $2.160 to $2.164 billion in revenue and adjusted operating income between $1.292 and $1.296 billion. But the more immediate test may come from the London legal dispute — a ruling against Palantir could set a precedent that other municipalities and agencies might follow.

On the operational front, the company isn't standing still. A partnership with Mercury Systems to automate material planning for US military programs and the integration of Nvidia's open Nemotron models for government and critical infrastructure use show Palantir continues to deepen its government relationships despite the noise.

The bull case rests on a simple proposition: the growth momentum is real, the commercial business has become a genuine second pillar, and government demand shows no signs of abating. The bear case is equally straightforward: the stock's valuation already prices in perfection, insiders are selling into strength, and the political headwinds are gathering in precisely the segments driving the most growth.

For now, Palantir remains a bet on data's central role in warfare and corporate survival — a bet that has paid off spectacularly so far. Whether it can continue to outrun the accumulating questions around valuation, tax practices, and geopolitical positioning is the debate that will define the coming months.