Palantir's Incredible Quarter Breaks the Sell-the-News Curse

For four consecutive quarters, Palantir Technologies delivered earnings beats and watched its stock fall anyway.

That streak ended Monday night. The company reported second-quarter adjusted EPS of $0.41 against the Zacks Consensus Estimate of $0.35 — a 17.1% surprise — on revenue of $1.94 billion versus the $1.81 billion consensus, a 7.2% beat. Revenue grew 93% year over year and 19% sequentially, marking a twelfth consecutive quarter of accelerating growth.

Shares surged roughly 15% in early trading on Tuesday. After a year in which the business kept compounding while the stock kept sliding, the market finally paid.

The Metric That Answered the Question

In our pre-earnings commentary, we argued that U.S. commercial growth was the one number that mattered — the proof point for whether Palantir had genuinely outgrown its defense-contractor origins.

And it didn’t merely hold; it accelerated. U.S. commercial revenue jumped 149% year over year to $764 million and 28% sequentially. U.S. government revenue grew 90% to $809 million, which also came in comfortably ahead of consensus.

Total U.S. revenue climbed 115% to $1.57 billion and now accounts for roughly 81% of the business. For context, U.S. commercial grew 133% last quarter. When a segment this size accelerates by double-digit percentage points, the deceleration thesis at the heart of the bear case loses its footing.

The Expansion Data Is the Quiet Standout

What distinguishes this print from a typical hypergrowth story is that the growth arrived with genuine cash profits. GAAP net income attributable to common stockholders reached $1.06 billion at a 55% margin. Cash from operations totaled $1.216 billion and adjusted free cash flow reached $1.22 billion, both at 63% margins. The balance sheet ended the quarter with $9.2 billion in cash, equivalents and short-term Treasuries, up from $8 billion three months ago.

The customer metrics deserve more attention than they’ll get. Net dollar retention reached 157%, up roughly 700 basis points from 150% last quarter — meaning existing customers alone expanded spending about 57% before a single new logo is counted.

Palantir PLTR closed 220 deals worth at least $1 million, of which 98 exceeded $5 million and 73 exceeded $10 million. Total contract value closed was $3.37 billion, up 49%. Total customers rose 24% to 1,049.

That mix — roughly a third of seven-figure deals now above $10 million — is the signature of AIP graduating from pilot programs into production deployments, which is precisely the transition bulls have been waiting to confirm.

The Guidance Raise Is the Real Story

Beating a quarter is one thing; raising the year by this magnitude is another. Palantir lifted full-year 2026 revenue guidance to $8.150–$8.158 billion, implying 82% growth, up from $7.650–$7.662 billion and 71% growth just three months ago — the second consecutive double-digit-point raise, following what had been the largest guidance increase in company history.

U.S. commercial guidance moved to more than $3.424 billion, implying at least 134% growth, up from 120%. Adjusted income from operations guidance rose to $4.889–$4.897 billion, and adjusted free cash flow guidance climbed to $4.5–$4.7 billion from $4.2–$4.4 billion.

Third-quarter revenue is guided to $2.160–$2.164 billion, roughly 12% sequential growth off an already-elevated base. Management reiterated that it expects GAAP operating income and net income in every quarter of the year.

Bottom Line

Palantir entered with a Zacks Rank #2 (Buy) and an Earnings ESP of 0.0% — a favorable estimate-revision trend, but no statistical edge on the print itself.

The company beat anyway, extending its streak to 15 consecutive quarters. The practical consequence matters more than the beat: with guidance raised across every major line, analysts will almost certainly revise estimates upward in the days ahead, and rising estimates are the engine that drives the Zacks Rank.

CEO Alex Karp used his shareholder letter to argue that enterprises want sovereignty over their data and shouldn’t see their competitive advantage become training data for future models — calling the quarter “otherworldly.”

Whether or not one finds that framing persuasive, 149% commercial growth and 157% net dollar retention are not the signature of a business being disintermediated. Risks remain, but for the first time in nearly a year, Palantir’s stock and its business are pointed in the same direction.

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