Palantir stock surges 120% as Q2 earnings beat spurs analyst upgrades

Palantir Technologies NASDAQ:PLTR shares surged more than 20% in trading on Tuesday after the company reported stronger-than-expected second-quarter results, prompting several Wall Street firms to raise price targets and, in one case, upgrade the stock.

The software company reported adjusted earnings per share of 41 cents, well above Wall Street expectations of 34 cents and sharply higher than 16 cents a year earlier.

Revenue climbed 93% year over year to $1.9 billion, topping analysts’ estimates of $1.8 billion.

Adjusted operating margin expanded to 62%, compared with 46% a year ago, while also exceeding projections of 60%.

Palantir also issued better-than-expected guidance for the current quarter and raised its full-year 2026 outlook, reinforcing investor optimism around the company’s artificial intelligence business.

Chief Executive Officer Alex Karp described the performance as “otherworldly,” highlighting that US commercial revenue grew 149% year over year during the quarter.

Analysts upgrade outlook after strong AI-driven growth

The earnings report prompted a wave of analyst commentary, with several firms becoming more optimistic about the company’s long-term prospects.

William Blair analyst Louie DiPalma said the results have shifted the narrative surrounding the company.

“The stellar performance defies concerns that competition with Anthropic and OpenAI is intensifying for enterprise AI workflows,” he said.

DiPalma added that there was no public software company or defense contractor with the same combination of revenue growth and profitability.

He maintained an Outperform rating and said he sees upside toward the $200 range over the next year.

Deutsche Bank upgraded Palantir to Buy from Hold while maintaining its $200 price target.

The brokerage said Palantir is “operating several steps ahead” of the broader software sector in translating AI demand into customer value.

Deutsche Bank also argued that the stock’s valuation appears “even more reasonable” following the quarterly results, adding that current levels do not fully reflect the company’s “unparalleled Rule of 155 profile” or its long-term enterprise AI opportunity.

Cantor Fitzgerald maintained a Neutral rating but increased its price target to $156 from $138.

“We continue to believe Palantir remains a leading beneficiary of secular AI growth trends,” analyst Thomas Blakey wrote.

Not all analysts turned more bullish.

Jefferies raised its price target to $80 from $70 while maintaining an Underperform rating, citing tougher growth comparisons ahead and moderating international expansion.

Morningstar assigned a fair value estimate of $153, noting that “high expectations are embedded” in the stock and warning there is “little margin for error.”

US commercial business drives growth

Palantir’s strongest momentum continued to come from the United States, particularly its commercial business.

The company reported that US commercial revenue increased 149% year over year, while US government revenue rose 90%.

Although government contracts remain Palantir’s largest business, the commercial segment is narrowing the gap as more enterprises adopt the company’s software to organize proprietary data and deploy AI applications.

International growth remained positive but lagged the domestic business, with revenue outside the United States increasing 33%.

In his shareholder letter, Karp reiterated his criticism of leading AI model developers while emphasizing the importance of enterprise control over proprietary data.

“Every organization in the world is awakening to the risks of handing the creators of the language models the keys to their institutions, of letting the models loose within their homes,” he wrote.

“The models have grown and thrived by essentially ingesting the entire written work product of our civilization. And those models, as well as their creators, now have their sights set on global industry.”