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Palantir $PLTR was built for war. Turns out, it’s pretty good at earnings calls, too.
Just days ago, Palantir landed a $10 billion, 10-year enterprise deal with the U.S. Army — a sweeping agreement that consolidates 75 separate contracts into one massive framework to meet growing warfare demands. While the deal doesn’t guarantee that the Pentagon will spend the full amount, it signals something just as important: Palantir is no longer a niche contractor. It’s becoming core infrastructure for how America wages war — and increasingly, how it runs everything else.
Then came earnings. On Monday, Palantir reported its best quarter ever: $1 billion in revenue, up 48% year-over-year; $426 million from U.S. government work alone; $569 million in free cash flow. Stock was up almost 7% in the morning following the earnings beat. The once-shadowy company known for building surveillance tools and secretive, intelligence-focused battlefield software delivered the kind of numbers most public software firms only fantasize about — and with a level of profitability to match.
The company achieved a kind of “Rule of 94” — 48% top-line growth plus 46% adjusted operating margins — which signals of both velocity and discipline. For comparison, most healthy SaaS companies aim to hit the “Rule of 40,” where growth and margins together add up to 40%. Wedbush analysts hailed Palantir’s quarter as “eye-popping.” William Blair praised the company’s ability to ride the “AI tidal wave.” Jeffries analysts “commend[ed] the strong execution,” even as they stuck to their bearish stance, warning that the stock trades at about 74 times projected 2026 revenue. “Valuation [is] on a different planet.”
That last part is up for debate. But there’s little disagreement on this: Palantir has become one of the most important — and lucrative — AI vendors in the world. And its transformation from government spook shop to enterprise juggernaut is well underway.
At the center of Palantir’s transformation is AIP (AI Platform), the company’s flagship AI deployment framework, which blends language models with proprietary data pipelines and domain-specific software logic, tied together by what Palantir calls “ontology.” On paper, it sounds like jargon. In practice, it’s working. “LLMs, on their own, are, at best, a jagged intelligence divorced from even basic understanding,” said Ryan Taylor, Palantir’s chief revenue and legal officer. “By contrast, our ontology is pure understanding, concretized in software. This is reality, not rhetoric, and enterprises are experiencing this reality keenly. LLMs simply don’t work in the real world without Palantir. This is the reality fueling our growth.”
Added chief technology officer and executive vice president Shyam Sankar: “AIP isn't just software our customers use, it’s software our customers are building their software on.”
In the U.S. commercial segment alone, revenue grew 93% year over year in the second quarter and now accounts for more than 30% of Palantir’s total business. Its top 20 commercial customers are now spending an average of $75 million annually, up 30% from a year ago. Contract value in the U.S. commercial business surged to $843 million, a 222% jump. “U.S. Commercial remains the star of the show,” analysts at Wedbush wrote in a note, upgrading the stock and lifting their price target to $200. Calling Palantir the “Messi of AI,” they wrote: “More enterprises [are] looking to PLTR for complex AI use cases.”
And then there’s the Army contract, which signals that Palantir is now foundational, not experimental. In William Blair’s post-earnings note, analysts described the deal as a major long-term catalyst, saying that the cost- and job-cutting Department of Government Efficiency “has had zero negative impact on Palantir’s U.S. government business, which achieved its fastest growth rate since the second quarter of 2021.”
Palantir’s roots remain in defense and intelligence. But what’s happening inside the company right now is bigger than a Pentagon pivot. In both government and commercial markets, Palantir has become a platform play. It offers the software infrastructure behind how agencies run operations, how executives coordinate supply chains, how factories adopt AI, and how warfighters fuse data from drones, satellites, and battlefield sensors in real time.
That kind of foundational role is by design. “We still believe America is the leader of the free world, that the West is superior, that we have to fight for these values,” CEO Alex Karp said on the earnings call. “We should give American corporations and, most importantly, our government an unfair advantage. ... We have done this by creating a company where every single component is value accretive.” That’s the language of philosophy, not product-market fit. But it has also increasingly become the company’s differentiator. Palantir sells a worldview — one where the West prevails and its clients gain “unfair” advantages over adversaries through smarter software, faster decision-making, and scalable intelligence. That might sound like branding, but to the people signing billion-dollar contracts and checks in the Pentagon, it’s policy.
CTO Sankar made the case more technically: “Our products were built for this moment, and the numbers show it. … Realizing value from AI in the enterprise requires the elegant integration of LLMs, workflow, and software — and that’s only possible with ontology.”
Investors seem to agree. Palantir shares are up more than 624% over the past 12 months (and 132% year to date). The company added 80 net customers in the second quarter, bringing its total to 849. And Palantir raised full-year guidance across the board: Total 2025 revenue is now expected to land between $4.142 billion and $4.150 billion, with U.S. commercial growing 85% and free cash flow projected to hit $2 billion.
Even skeptics are acknowledging momentum. Jefferies noted that while Palantir’s valuation remains “disconnected from even optimistic growth scenarios,” the company has clearly found product-market fit. Its backlog, measured by remaining performance obligations (RPO), grew 77% year over year. U.S. government revenue rose 53%, driven by contracts with the Army, Space Force, and intelligence agencies. That includes a fresh $218 million Space Force award and a $795 million ceiling expansion on the Pentagon’s Maven initiative.
And Palantir is scaling without the go-to-market machine most enterprise software giants rely on. “Our primary sales force now — and I think likely in the future — are customers telling other customers, ‘If you want this to work, bring them in,’” CEO Karp told investors. Instead of 10,000 quota-carrying reps, Palantir sends in small teams of Field Deployable Engineers (FDEs) who tailor solutions on the ground. Clients don’t just license software — they build with it, and then expand from within. That peer-driven, boots-on-the-ground model may not scale forever. And not everyone is convinced Palantir’s model will hold up under hyper-growth expectations or international complexity.
OpenAI and Anthropic have started picking off early-stage federal pilots, a sign that Washington is no longer a guaranteed moat for Palantir. The company may have the deeper relationships, but the hype cycle has a short memory, and generative AI’s darlings are eager to wedge themselves into defense and intel budgets. At the same time, Palantir’s commercial growth story still skews heavily domestic. International expansion remains sluggish, with little to suggest the kind of breakout traction the company has achieved in the U.S. William Blair analysts, however, say the company’s struggles in the international commercial segment “have only been a small blip relative to the massive outperformance for the company’s other segments.” Still, competition abroad is intensifying, and Palantir has yet to prove that AIP scales cross-border with the same velocity. Then there’s the company’s valuation. Earlier this year, Citi and UBS both flagged Palantir’s sky-high multiples as a glaring risk. And even after the second quarter’s massive earnings, Jefferies hasn’t budged from its “Underperform” rating.
But even the skeptics are increasingly outnumbered.
Morgan Stanley $MS recently raised its target to $155, praising Palantir’s “software-defined AI deployment” model and its technical moats, such as ontology-driven data integration and enterprise-grade workflows. Analysts wrote: “Palantir has the winning recipe to deploy AI. Wow … is our reaction to Q2 results.” And Wedbush took the longest view: “In the next few years,” analysts wrote, “Palantir has the potential to be a trillion dollar market cap as the AI Revolution takes hold.” That prediction might raise some eyebrows — but so did the idea, not too long ago, that a classified-era counterterrorism contractor could become one of the most-talked-about AI platforms in the S&P 500.
The numbers help.
Palantir beat EPS expectations by two cents, posted its highest-ever free cash flow quarter, and still sits on $6 billion in cash with zero debt. And Palantir is increasingly showing up as a buzzword on other companies’ earnings calls — as even competitors and critics have started mentioning AIP by name, signaling that Palantir’s presence is no longer hidden. It’s becoming standard. Palantir’s edges (its anti-corporate ethos, deep federal alignment, and once-controversial reputation) now serve as differentiation points. The company still refuses to act like a conventional SaaS vendor. Its canvassing of “blue-collar AI” — Karp said that Sankar and others “are leading our charge to arm the working class or blue collar workers with AI agency enhancing skills” — demonstrates that the company leans into ideology just as much as analytics.
But if Palantir wants to hold investor confidence at its sky-high valuations, it will need to prove that ideology scales like software. Still, when most enterprise platforms are still chasing product-market fit, Palantir has corporate and government adoption at scale. Its commercial traction is real. Its enterprise deals are real. And the results? Real money.
Now, a company that was once a punchline — a spooky surveillance firm with anti-corporate swagger and no clear sales strategy — has become a platform other companies want to emulate. Palantir doesn’t just sell software. It sells leverage: to governments, to investors, to CEOs trying to retrofit global supply chains with AI while cutting headcount. In a world where geopolitics, infrastructure, and artificial intelligence are increasingly intertwined, that’s a powerful thing to own.
