Palantir Wins More Government AI Deals as Its Stock Slides

How does a company grow its revenue 85% and still watch a third of its market value disappear? That is the contradiction Palantir has lived inside all year.

The numbers are not the problem. First-quarter revenue rose 85% to US$1.63bn, its 11th straight quarter of accelerating growth.

The stock tells the opposite story. It has fallen about 40% from its November peak, cutting the company's market value from roughly US$500bn to around US$300bn.

CEO Alex Karp is not short on conviction. Palantir's results, he told shareholders in May, "demonstrate a level of strength that dwarfs the performance of essentially every software company in history at this scale." The market has spent 2026 disagreeing.

Tonight, both sides get their answer, as the data-analytics group reports second-quarter results after the US market closes.

The bar for tonight

Palantir has guided to Q2 revenue of about US$1.8bn, near 80% growth, and raised its full-year outlook to roughly US$7.65bn. On price, the Street splits three ways.

• Oppenheimer, the bull. Outperform and a US$200 target, expecting growth nearer 85% and another guidance raise.
• Citigroup, in the middle. Still a Buy, but its target came down from US$225 to US$200, blaming a compressing multiple rather than the business.
• RBC Capital, the bear. A US$90 target, less than half the current price, doubting growth can hold as OpenAI and Anthropic push into enterprise AI.

Options traders are braced for a swing of 10% to 12% on the print, and a simple beat-and-raise may no longer be enough.

Government is still the backbone

Much of that growth runs through the state and the pipeline is expanding. US government revenue grew 84% in the first quarter, and in July the US Army chose Palantir's Foundry platform for NGC2, its next-generation command-and-control programme. A partnership with Nvidia targets sovereign AI infrastructure for governments building their own systems.

The government story is not all wins. A Defense Intelligence Agency contract was withdrawn after a protest, and in Europe the mood is cooler.

Germany and France are said to be weighing alternatives, and the Mayor of London blocked a US$67m police contract. For a company whose brand is national security, political resistance is a risk of its own.

The moat, on trial

The faster engine now is US commercial work, up 133% in the first quarter and it is also where the doubts gather. Critics have taken to calling Palantir 'just an LLM wrapper', a thin layer over other firms' models. A free open-source rival called World Monitor, posted to GitHub, recently knocked the shares about 6% in a session

Palantir's answer is its Ontology, the framework tying enterprise data, rules and real-world actions into one governed system it argues rivals cannot easily copy.

That is the argument Palantir's leadership keeps pressing. On the Q1 earnings call, Chief Technology Officer Shyam Sankar called the Ontology a "no slop zone", arguing that "more tokens means more slop" — the more commodity AI a company runs, the more it needs a governed layer to stop it doing damage.

The company has also joined Nvidia, Microsoft and Meta in lobbying regulators against early limits on open-weight AI. Tonight the market gets to vote.

At more than 50 times sales, the stock leaves almost no room for a miss.

For finance leaders, the more useful question is not whether Palantir beats. It is whether triple-digit growth is a phase or a business model, because that answer sets the price for every AI software company behind it.