TL;DR — Palantir’s second-quarter revenue grew 93% year over year to $1.94 billion, with U.S. commercial revenue up 149% and a Rule of 40 score of 155%. Shares jumped roughly 30% on the news before settling near $156, where the stock trades at 107 times trailing earnings and 80 times next year’s estimates — among the richest multiples in software.
Palantir posted second-quarter revenue of $1.935 billion, up 93% year over year — an unusual growth rate for a company that’s been public for five years and now generates nearly $8 billion a year. U.S. commercial revenue grew 149% to $764 million, and U.S. government revenue grew 90% to $809 million. CEO Alex Karp described demand for what the company calls “AI sovereignty” as having “been unleashed.” The stock jumped roughly 30% on the news. It has since settled near $156, where it trades at 107 times trailing earnings and 80 times next year’s consensus estimate.
A Growth Rate That Doesn’t Fit the Company’s Size
Palantir’s Rule of 40 score — growth rate plus profit margin, a standard software-industry health check — came in at 155%, nearly four times the 40% threshold considered healthy. GAAP operating income was $912 million, a 47% margin, and adjusted free cash flow was $1.22 billion, a 63% margin. The company raised full-year guidance across the board: revenue to $8.15–$8.16 billion, adjusted free cash flow to $4.5–$4.7 billion, and U.S. commercial growth guidance to “at least 134%.” Few software companies of any size post numbers like these. None trade like Palantir does, either.
The Multiple That Leaves No Room for Error
A 107x trailing P/E and an 80x forward P/E are, by most measures, among the richest valuations in software — expensive even relative to Palantir’s own growth rate. The math only works if growth of this magnitude continues for years, which raises two specific questions analysts have flagged: whether U.S. commercial revenue can keep growing near 149% off a much larger base, and whether government revenue growth, already at 90%, eventually runs into the practical ceiling of federal contracting cycles and budget approvals.
- U.S. commercial revenue: $764 million, up 149% — the segment doing the most work to justify the valuation.
- U.S. government revenue: $809 million, up 90% — dependent on contracting cycles that don’t always move at software speed.
- Valuation: 107x trailing earnings, 80x forward — a multiple with almost no tolerance for a growth miss.
Palantir’s numbers this quarter were good enough to justify almost any valuation. The stock’s valuation already assumes they stay that good, indefinitely.
Sovereignty Sells, For Now
Karp’s “AI sovereignty” framing — selling governments and large enterprises the ability to run AI systems on infrastructure they fully control — is the same broader AI infrastructure buildout that’s shown up all over this earnings season, from Nvidia’s packaging capacity constraints to the concentration Third Pole flagged when a third of every S&P 500 dollar started flowing to six companies. Palantir isn’t one of those six, but its valuation reflects the same market conviction that AI spending keeps compounding. The bear case isn’t that the business is bad — the numbers this quarter argue the opposite. It’s that a 107x multiple prices in years of 90%-plus growth that no software company has ever sustained indefinitely.
Palantir reports third-quarter results in early November. The headline growth rate will get the attention. Whether U.S. commercial growth holds anywhere close to 149% on a base that’s now nearly $200 million larger is the number that actually tests the valuation.
This piece draws on Palantir’s second-quarter 2026 earnings release, filed with SEC EDGAR for the quarter ended June 30, 2026, and TradingKey’s analysis of the stock’s post-earnings valuation. Third Pole Markets holds no position in Palantir as of publication; see our About page for the full disclosure policy.
