What Is Really Driving Palantir’s Growth?
Palantir Technologies (PLTR) is known for selling software to governments. Its fastest growth now comes from American companies. U.S. commercial revenue is what those American companies pay Palantir. That line reached $764 million in the latest quarter. It grew 149% from a year earlier. So what are American companies buying?
What Is Palantir Selling To American Companies?
Those figures come from the fiscal second quarter of 2026. What these customers buy is control. Management said enterprises demand ownership of their own data, logic, actions, and security.
They do not want to hand that to an outside model. Palantir’s software is the layer that lets a customer work that way.
The demand shows up in volume. The company counted 653 U.S. commercial customers. That is 35% more than a year earlier.
Palantir also signed a record $2.132 billion of new U.S. commercial contracts. That figure counts the full life of each deal. It was 153% above the year before.
U.S. government revenue was larger than U.S. commercial revenue, at $809 million. Government revenue grew 90%. The commercial side is growing faster.
Management expects that to continue. It raised the full-year target for this business above $3.424 billion. That is growth of at least 134%. The price you pay for it is the next question.
Are You Paying Too Much For That Growth?
You are paying a very high price. Palantir trades at 147 times its trailing earnings. The S&P 500 trades at 22.6 times.
A price-to-earnings ratio is what you pay for each dollar of yearly reported profit. On that measure the stock costs several times as much per dollar of profit as the average large American company.
Two things here do support that price. The growth is profitable. Operating profit took 43% of revenue over the past year. The S&P 500 figure is 18.6%.
Existing customers also keep spending more. Management put net dollar retention at 157% for the quarter. That means the customers it already had spent about half again as much as they did before.
Nothing here lowers what a buyer pays for each dollar of profit today.
The price has also moved a long way already. Palantir returned 59% over the past three months. The S&P 500 returned 5.7%.
Over a longer window it looks different. The stock returned 1.4% over the past year. The index returned 17.9%. The stock has also fallen hard before.
The 2022 inflation shock and Fed tightening are the clearest cases. Palantir dropped 64% then. The S&P 500 dropped 24%. So what happens next in this business matters.
Where Could Palantir Trip Up Next?
The limit sits inside the company. Management said the rate of software deployment is what holds growth back. Demand is not the constraint.
Costs are rising at the same time. Management expects a big step up in expense in the third quarter. New hires start then.
The next report covers the fiscal third quarter of 2026. It will show whether the commercial run holds. Watch whether U.S. commercial revenue stays on a path above $3.424 billion for the year. Watch the customer count too.
A quarter that holds that pace would show American companies carrying the business. It would make today’s price easier to defend.
A weaker quarter would show the opposite. New U.S. commercial contracts falling well short of the $2.132 billion just signed would be the first warning. Growth short of the pace management guided would be the second. Either would leave the price ahead of the business.
How To Act On PLTR?
Play Offense
Learn more about PLTR | Identify catalysts | Generate income against PLTR stock
Play Defense
Trim your PLTR position | Tax-friendly unwind of PLTR | Opt for high-quality portfolio