Palantir Technologies (PLTR): Accelerating Growth and a Return to Record Highs
Palantir Technologies (PLTR) is delivering some of the strongest growth numbers in the software industry. Revenue growth has accelerated for nine consecutive quarters, profitability is improving, and demand from both government and commercial customers continues to exceed expectations.
After a sharp sell-off earlier this year, the stock has also made an impressive recovery. Shares nearly doubled from their June lows to reach a new record closing high of $209.05 on October 9. And while the valuation remains steep, we think the company’s accelerating growth makes Palantir worth another look.
Palantir develops software that allows governments and large organizations to use their own data and AI models to manage complex operations. The company built its reputation serving U.S. defense and intelligence agencies, but its commercial business has become an increasingly important source of growth.
The latest quarterly results show just how quickly that expansion is happening.
Second-quarter 2026 revenue surged 93% year over year to $1.94 billion, marking the ninth consecutive quarter of accelerating growth. For comparison, revenue was growing 27% in the second quarter of 2024.
The U.S. commercial business grew an extraordinary 149%, while U.S. government revenue increased 90%. Both segments are expanding rapidly, giving Palantir multiple sources of demand rather than relying on a single customer category.
Existing customers are also spending considerably more. Net dollar retention reached 157%, meaning customers already using Palantir’s products increased their spending by 57% compared with a year earlier.
That’s an especially encouraging sign because it suggests customers are finding enough value in the software to expand their use of it.
Profitability has been just as impressive. Palantir generated more than $1 billion in quarterly net income for the first time, while its adjusted operating margin reached 62%.
One way to measure the combination of growth and profitability is the Rule of 40, which adds a software company’s revenue growth rate to its profit margin. A score above 40 is generally considered healthy.
Palantir’s score reached 155 in the second quarter, its 12th consecutive quarterly improvement. For perspective, Microsoft’s score is approximately 66, while CrowdStrike, a software company with a similar revenue base, scores around 45.
That combination of rapid growth and strong margins helps explain why investors are willing to pay a substantial premium for Palantir shares.
Management’s outlook is equally encouraging.
Palantir has raised its full-year 2026 revenue guidance following every earnings report this year. In February, management projected approximately $7.19 billion in revenue, representing 61% growth. By August, that forecast had climbed to $8.15 billion, or 82% growth.
Third-quarter guidance implies another 83% revenue increase, and the company is scheduled to report results on November 2.
We see that upcoming report as an important catalyst. Another strong quarter could reinforce the company’s growth trajectory and provide additional support for the stock’s recent recovery.
Palantir’s backlog also suggests demand remains strong. Total remaining deal value has climbed 83% to $13.1 billion, providing substantial visibility into future business.
Another development worth watching is the company’s expanded partnership with Nvidia, announced in September.
The arrangement combines Nvidia’s open AI models with Palantir’s software platform, allowing organizations to deploy AI using their own data while maintaining control over the models they train. Nvidia is already using the technology within its own supply chains, providing a practical example of how the combined offering can be deployed.
We think this strengthens Palantir’s position among organizations that want to use advanced AI without giving up control of sensitive information or critical operations.
Of course, the biggest question is valuation.
Palantir carries a market capitalization of approximately $483 billion and trades at roughly 59 times management’s 2026 revenue guidance and 78 times consensus 2027 earnings estimates.
Those are exceptionally high multiples, leaving little room for disappointing results or slower growth.
However, there’s an important difference between Palantir’s valuation today and the last time shares reached record levels.
The stock closed at $207.18 last November before falling 48% to approximately $107 in June. It subsequently recovered to a new record close of $209.05 on October 9.
Although the share price has returned to roughly the same level as last November, quarterly revenue is now 64% higher. That means investors are paying a lower multiple of the company’s revenue today than they were at the previous peak.
The technical picture has also improved considerably.
Palantir broke out of a lengthy trading range on August 4 following its second-quarter earnings report. The move came on the heaviest trading volume of the year, with shares opening near $145 after closing in the mid-$120s the previous session.
The stock subsequently pulled back toward $166 twice in September, but buyers stepped in both times. Shares then broke above resistance near $195 on October 8 before reaching a high around $213 on October 12.
More recently, the stock has experienced some profit-taking, closing near $201 on October 14 and trading around $195 the following morning.
For traders, the $185 area is an important level to watch. That was the lower boundary of the late September and early October consolidation range. A closing price below $185 could signal that the recent breakout is failing.
Longer-term investors may want to watch the $166 area, which provided support twice in September. A weekly close below that level would weaken the pattern of higher lows that has developed since August.
It’s also important to recognize how volatile Palantir can be. The stock has a beta of approximately 1.6, indicating greater sensitivity to market movements than the broader market. Its five-year maximum drawdown reached 85%, so investors should be prepared for potentially significant swings.
The stock trades around $195 per share based on the latest price indicated in the report.
We wouldn’t describe Palantir as a bargain, and its valuation makes disciplined position sizing particularly important. But we think the underlying business continues to justify serious consideration.
Revenue growth has accelerated for nine straight quarters, U.S. commercial sales are expanding at a triple-digit rate, existing customers are spending substantially more, and management continues to raise its forecasts.
With another earnings report approaching on November 2, an $13.1 billion remaining deal value and a growing partnership with Nvidia, Palantir has several potential catalysts ahead.
For investors comfortable with a higher-risk growth stock, we think Palantir Technologies remains an attractive opportunity. Its recent recovery has been dramatic, but the company’s accelerating revenue, strong profitability and expanding commercial business suggest there may still be room for additional long-term gains.
