Analysis
Palantir's second quarter answered the question that's dogged the stock for two years: can its AI platform business, AIP, actually scale past government contracts into repeatable enterprise revenue? The numbers say yes. Total revenue hit $1.94 billion against a $1.80 billion consensus, up 93% year-over-year, with net income of $1.07 billion compared to roughly $329 million in the same quarter last year.
The commercial number is the one that matters for the thesis. U.S. commercial revenue grew 149% year-over-year to $764 million -- and on a compounded basis is up 380% since 2024. That's not one large enterprise deal skewing the average; management framed it as broad-based adoption of AIP across manufacturing, healthcare, and financial services customers running production workloads, not pilots.
The Commercial Number
Critically, the commercial surge came alongside continued government strength, not instead of it. U.S. government revenue grew 90% to $809 million, meaning Palantir's defense and intelligence relationships -- built over nearly two decades and reinforced by the current administration's AI procurement push -- kept compounding while the newer commercial book took off in parallel.
Management backed the print with a guidance raise, lifting full-year U.S. commercial revenue guidance to "in excess of" $3.42 billion from a prior $3.22 billion floor. That's the kind of forward commitment a management team only makes when the pipeline behind it is unusually visible. The stock rallied 12% on the release.
The skeptical case hasn't disappeared -- Palantir shares are still down roughly 29% year-to-date heading into this print, reflecting broader worry that the AI software trade overpaid for growth that would eventually slow. This quarter is the strongest rebuttal management has produced yet, but one print doesn't retire a multiple built on years of forward expectations.
What to watch: whether commercial growth holds above 100% for another two quarters, which would settle the scaling debate more permanently, and whether competitors -- from hyperscaler AI platforms to newer agentic-workflow startups -- can chip into the specific vertical accounts Palantir is counting for 2027 guidance.
