Why Palantir Technologies Stock Charged Higher Today

Core Viewpoint - Palantir Technologies reported strong quarterly financial results, alleviating concerns about a slowdown in AI, leading to a significant increase in stock price [1][3]. Financial Performance - For the fourth quarter, Palantir achieved record revenue of $1.4 billion, marking a 70% year-over-year increase and a 19% quarter-over-quarter increase, representing the 10th consecutive quarter of accelerating growth [3]. - Adjusted earnings per share (EPS) reached $0.25, surpassing analysts' expectations of $0.23, while revenue expectations were also exceeded [3]. Revenue Breakdown - U.S. government revenue increased by 66% to $570 million, while U.S. commercial revenue, which includes the Artificial Intelligence Platform (AIP), surged by 137% to $507 million [4]. - The growth trajectory suggests that U.S. commercial revenue may soon surpass government contracts as the primary growth driver for the company [4]. Profitability Metrics - Palantir's gross profit margin improved to 84.6%, up from 78.9% in the previous year, and the net profit margin rose to 43.4%, up from 9.2%, indicating effective scaling of operations [5]. Future Guidance - Management provided preliminary guidance for 2026, forecasting full-year revenue of $7.19 billion, which represents a 61% growth at the midpoint and is nearly $1 billion above analysts' consensus estimates [6]. Market Reaction - Following the impressive performance, Wall Street analysts updated their models, resulting in multiple upgrades and increases in price targets for Palantir's stock [6]. Valuation Considerations - Despite the strong growth, Palantir's stock is considered expensive, trading at 366 times earnings and 111 times next year's expected earnings, although continued growth could justify the current valuation [7].