Why Is Everyone Watching Palantir Stock?
Palantir Technologies (PLTR) has become one of the most talked-about artificial intelligence (AI) stocks after delivering another blockbuster quarter. With record government contracts, surging U.S. commercial growth, and profitability metrics that few software companies can match, investors are paying attention again.
PLTR stock has soared 135% so far this year, outperforming the Magnificent Seven group. Here’s why everyone’s watching Palantir right now.
Valued at $407.4 billion, Palantir builds powerful data and AI software that helps governments and companies make better decisions. Its platforms, like Foundry, Gotham, and Artificial Intelligence Platform (AIP), collect and analyze enormous volumes of data to solve complex challenges ranging from tracking military actions to boosting company efficiency.
In the third quarter, total revenue jumped 63% year-over-year (YoY) to $1.18 billion. Palantir’s government business remains its core strength, growing 52% YoY and 14% sequentially. In the U.S. alone, government revenue climbed 52% YoY to $486 million, fueled by strong execution in existing defense and intelligence programs and new contracts that reflect soaring demand for AI-driven software.
Its platforms, Foundry and AIP, continue to power mission-critical systems for the U.S. military and allied partners. The U.S. Army even issued a directive requiring all units to consolidate data operations on Vantage, a Palantir-based platform. Internationally, Palantir’s government revenue grew 66% YoY and 16% sequentially, boosted primarily by its continued work with the UK government. Overall, this public-sector performance contributed to Palantir’s record-breaking total contract value (TCV) bookings of $2.8 billion, up an astonishing 151% YoY. It comprised 204 deals for more than $1 million, including 53 worth more than $10 million. The company also saw a net dollar retention rate of 134%, signaling that customers are not only staying but also spending much more on Palantir’s platforms as AI usage grows globally.
However, over-reliance on government contracts has often drawn criticism, as analysts believe these contracts are restricted by budget constraints. Palantir realized the same and has been growing its commercial segment rapidly. The U.S. commercial business, now its fastest-growing division, surged 121% YoY and 29% sequentially, fueled by corporations rushing to scale AI across their operations. Palantir is not only growing rapidly, but it is also growing profitably. The company delivered an adjusted gross margin of 84%. Net income totaled $476 million, or 40% of revenue, with an adjusted earnings per share of $0.21.
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