Palantir’s AI Surge: Still a Buy or Missed the Boat?

Palantir’s stock rockets on AI hype—but can it outrun the skeptics?

Bulls see a runway. Bears smell déjà vu. Here’s the breakdown.

The AI Gold Rush

Defense contracts and enterprise deals fuel the fire—while short sellers circle.

Valuation vs. Velocity

Revenue growth impresses, but Wall Street whispers ‘overbought’ behind closed doors.

The Cynic’s Take

Another ‘disruptor’ trading at 20x sales? Wake us up at profitability. (We’ll wait.)

Revenue growth keeps accelerating

For the eighth straight quarter, Palantir saw its quarterly revenue growth accelerate. During this period,year-over-year growth went from 13% in 2023's Q2 to 48% last quarter. Meanwhile, its Q2 revenue of $1 billion easily topped management's forecast of $934 million to $938 million.

Data source: Palantir.

Palantir's growth continues to be led by U.S. commercial customers adopting its Artificial Intelligence Platform (AIP). The company once again credited AIP's ontology, saying it is "pure understanding," and that without it, large language models (LLMs) cannot actually work in the real world

The company said it is seeing new commercial customers now begin using AIP with higher initial ambitions, while existing customers are starting to expand more quickly. It once again highlighted various use cases, fromusing AIP to uncover mortgage fraud to automotive seating and electrical system companyusing its platform for various tasks, such as proactively managing its tariff exposure, automating administrative workflows, and dynamically balancing its manufacturing lines.

As a result, U.S. commercial revenue surged 93% to $306 million in the quarter. Meanwhile, its U.S. commercial remaining deal value -- which refers to revenue it will recognize in the future from contracts already signed -- soared 145% to $2.79 billion. U.S. commercial customer count climbed 64% year over year, or 12% sequentially, to 485.

On the government side of its business, revenue jumped 49% year over year to $553 million. U.S. government revenue soared 53% to $426 million. The company said it was winning business across civil, intel, and defense contracts. It highlighted a recent $10 billion, 10-year contract with the U.S. Army that consolidated 75 contracts into one.

International government revenue, meanwhile, grew 37% to $127 million, and it had its highest-ever bookings quarter in the segment. International commercial customers remain Palantir's one weak spot, with revenue down 3% to $144 million.

Net dollar retention -- which measures revenue growth from existing customers that have been with the company for more than a year -- was 128%. A number above 100% indicates expansion. This metric was up from 124% last quarter, as customers rapidly expand their use of AIP.

Adjusted earnings per share (EPS) ROSE from $0.09 to $0.16 year over year. That was ahead of the $0.14 analyst EPS consensus compiled by. 

Looking ahead, the company guided for Q3 revenue of between $1.083 billion and $1.087 billion, representing growth of nearly 50% at the midpoint.

It also raised its full-year revenue guidance, taking it from a range of $3.890 billion to $3.902 billion to a new range of $4.142 billion to $4.150 billion, representing 45% growth.

Image source: Getty Images.

Is the stock still a buy?

Palantir's stock is not cheap. It trades at a forward price-to-sales (P/S) ratio of over 110 times the 2025 analyst estimates and more than 85 times the 2026 estimates.

In fact, if its stock price got cut in half, the stock's valuation still wouldn't exactly be in the bargain bin. However, the company's quarterly revenue growth has accelerated from 27% a year ago to 48%, and it looks like it could grow its revenue by more than 50% in Q3.

That's an incredible acceleration and speaks volumes about the company's technology. AIP can be used across such a wide breadth of industries to help solve very different problems. As Palantir establishes AIP as the AI operating system needed to bring AI to the real world, the upside is enormous, and the company has the opportunity to one day grow into one of the largest companies in the world.

Given its valuation, Palantir doesn't have a lot of room for error, but it's not a stock I'd bet against over the long term. Expect the momentum to continue.