Palantir stock jumped 12% after crushing second-quarter earnings, a stunning reversal for a company that had lost nearly a third of its value since the year began. Investors had been bracing for AI fatigue to slow the software powerhouse. Instead, revenue topped estimates and forward guidance climbed sharply higher.
The numbers tell a clean story. Adjusted earnings landed at 41 cents per share, beating the 35 cents analysts expected. Revenue hit $1.94 billion, well ahead of the $1.80 billion forecast. But the real shocker was in the guidance. Palantir raised its full-year revenue target to 71% growth, a jump of 10 percentage points from the prior quarter's projection. That kind of acceleration doesn't happen by accident.
Commercial business is where the real explosion is happening
U.S. commercial revenue surged 133% year over year, reaching $595 million in the quarter. That's the business side of the company firing on all cylinders, not just government contracts propping things up. Commercial sales more than doubled from the same period last year, and the momentum continued accelerating quarter over quarter. First-quarter U.S. commercial revenue grew 18% sequentially alone.
Total U.S. revenue climbed 104% annually to $1.282 billion, with government business also healthy at $687 million. The company now has enough critical mass that both segments are running strong simultaneously, which limits exposure if one sector stumbles. Contract velocity matters as much as revenue here. Palantir signed 206 deals worth at least $1 million in the quarter, including 72 contracts worth $5 million or more and 47 crossing the $10 million threshold.
Why the market had written this story too early
The 29% decline year-to-date reflected a common narrative in 2026: AI software valuations face compression as growth moderates. That thesis wasn't wrong in principle, just poorly timed for Palantir specifically. The company's commercial pipeline had been building quietly while skeptics focused on headline valuations. Doubling U.S. commercial business while federal work continues to expand is a rare combination that most software companies can't pull off.
The guidance lift is the harder number to argue with. Management doesn't casually raise 10 percentage points without conviction. That signals confidence in contract flow extending well into the year, visibility that typically only exists when large deals are already in hand or highly probable.
This material is informational only and does not constitute financial advice. Past performance and forward guidance do not guarantee future results.
