Palantir shares surge after earnings beat
Palantir Technologies Inc (NYSE:PLTR) shares jumped 20% to about $152 in early trade on Tuesday the company reported second quarter 2026 results that exceeded Wall Street expectations for both earnings and revenue.
The company reported adjusted earnings per share of $0.41, compared with the $0.35 consensus estimate, while revenue rose 93% year over year to $1.935 billion, above expectations of $1.8 billion.
US revenue increased 115% to $1.573 billion, including a 149% increase in US commercial revenue to $764 million. US government revenue rose 90% to $809 million.
Palantir closed 220 deals worth at least $1 million during the quarter, including 73 deals of at least $10 million. Total contract value increased 49% year over year to $3.373 billion, while US commercial TCV rose 153% to $2.132 billion.
GAAP operating income reached $912 million, representing a 47% margin, while adjusted operating income was $1.194 billion, or a 62% margin. GAAP net income was $1.062 billion, with adjusted free cash flow of $1.22 billion.
"This quarter was otherworldly," Palantir CEO Alex Karp said in a statement. "Demand for AI sovereignty has now been unleashed. And Palantir is the only company that has demonstrated it can transform tokens into actual economic value."
For the third quarter, Palantir expects revenue of $2.160 billion to $2.164 billion and adjusted operating income of $1.292 billion to $1.296 billion.
The company also raised its full year 2026 revenue guidance to $8.15 billion to $8.158 billion, while increasing its adjusted operating income outlook to $4.889 billion to $4.897 billion and adjusted free cash flow guidance to $4.5 billion to $4.7 billion. It also expects US commercial revenue to exceed $3.424 billion, representing growth of at least 134%.
UBS analysts wrote that Palantir posted an "outstanding" acceleration in growth, with total revenue growth reaching 93% and US commercial growth accelerating to 149%, above their 135% to 140% expectation. They noted that every key metric in the quarter exceeded their model and that the company raised its full-year 2026 guidance across its major metrics.
The analysts wrote that there was "zero evidence of increased competition" affecting Palantir's results, addressing what they described as a key bear-case concern. They also highlighted management's goal of maintaining more than 100% growth in total US revenue over the next 18 months, writing that the commentary could push out the timeline for peak growth.
UBS raised its estimates substantially and wrote that the results could improve the mixed narrative around the stock, citing the gap in sentiment between Palantir and peers, the company's guidance revisions and the potential benefits of its "sovereign AI" strategy.
The analysts maintained a 'Buy' rating and raised their price target to $220 from $200. They wrote that at about 44 times their revised 2027 free cash flow estimate, they viewed the shares as undervalued relative to Palantir's medium-term growth and profitability.