Palantir shares jumped 27% on Tuesday after second-quarter revenue rose 93% to $1.94 billion, beating estimates on a 149% surge in commercial sales. Wall Street analysts raised price targets on the stock, which had fallen 29% so far this year.
Palantir stock rocketed 27% higher on Tuesday after the company reported second-quarter revenue of $1.94 billion, up 93% from about $1 billion a year earlier and above LSEG estimates of $1.8 billion. Commercial revenue jumped 149% to $764 million, while government revenue rose 90% to $809 million.
AI sovereignty demand drives commercial growth
The company builds systems that integrate AI into a client's existing data, and it pinned the acceleration on demand for what it calls AI sovereignty: keeping proprietary data private from frontier AI labs such as OpenAI, Google, Anthropic, and Meta. In a letter to shareholders, Karp said momentum toward AI independence and sovereignty keeps building, adding that organizations increasingly resist handing control of their data and systems to AI-model developers.
Adjusted earnings per share reached 41 cents, up from 16 cents a year earlier and ahead of Wall Street's 34-cent estimate. Adjusted operating margin rose to 62%, up from 46% a year earlier and above the 60% estimate.
Stock reverses a 29% year-to-date decline
Palantir's stock had declined 29% so far this year as investors grew cautious about the AI trade. But the quarter eased the drag, at least for now: Barron's reported that U.S. sales climbed 115% in the quarter, even as international revenue rose 33%.
Analysts raise price targets
According to Barron's, the results shifted the narrative around the stock "from AI loser to AI winner," William Blair analyst Louie DiPalma said in a note. He carries an Outperform rating and expects shares to climb toward the $200 range over the next year. Cantor analysts kept a more cautious Neutral rating but raised their price target to $156 from $138. Citi analysts said the results undercut worries about mounting AI competition, pointing to demand for data privacy that sets Palantir apart from other AI companies.
Tuesday's broader rally lifted major indexes: the S&P 500 and Dow Jones industrials set record highs intraday as tech shares extended their rebound. Palantir led the day's gains among S&P 500 components.
Sources: CNBC, Barron's, Barron's
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