Written by: Rita
Palantir reported second-quarter revenue of $1.95 billion, a 93% year-over-year increase and 7% above market expectations. The stock rose 15% in after-hours trading following the earnings release. U.S. commercial business revenue grew 150% year-over-year, accelerating from 133% in the prior quarter. U.S. government business revenue increased 90% year-over-year, also outpacing the 84% growth seen in the first quarter. CEO Alex Karp set a goal of maintaining or exceeding the current growth rate for U.S. business over the next 18 months. Goldman Sachs raised its price target from $183 to $204 on August 4, maintaining a Neutral rating. Goldman Sachs noted that enterprise AI deployment is shifting from single-model strategies to multi-model portfolios, and Palantir’s ability to embed AI into workflows while preserving enterprise control over data and intellectual property may serve as a catalyst for the next phase of growth.
U.S. business accelerates by 150%, with both large orders and user retention rising.
In the second quarter, U.S. commercial business revenue grew 150% year-over-year, exceeding the first quarter's 133%, the full-year 2025 guidance of 109%, and the previous outlook of "over 120%." U.S. commercial business is accelerating.
220 transactions exceeded $1 million, 98 exceeded $5 million, and 73 exceeded $10 million. The average annual revenue (TTM) of the top 20 clients reached $124 million, a 67% year-over-year increase. Total contract value amounted to $2.1 billion, up 118% year-over-year. Net revenue retention stood at 157%, indicating extremely strong customer loyalty. Revenue quality from commercial business is improving, with increasing concentration among large clients.
U.S. government business grew 90% year-over-year, up from 84% in the first quarter. The Maven project is being adopted by more institutions, and Maven has been selected as the operational platform for a new initiative. Over 25,000 developers, military personnel, civil servants, and contractors are building applications on the platform, as the ecosystem expands.
Both the U.S. commercial and government sectors are accelerating, and Palantir’s growth is driven by multiple sources. U.S. business accounts for the majority of overall revenue, and CEO Karp has set a goal of sustained acceleration over 18 months, with management confident in the momentum.
Enterprises are shifting their AI strategies toward multi-model combinations, and sovereign AI is generating incremental demand.
Goldman Sachs believes Palantir’s next phase of growth stems from structural shifts in enterprise AI strategies, where companies dynamically switch between small language models, open-source models, and cutting-edge models based on specific use cases. Palantir’s platform integrates these models into a unified workflow.
The core need of this trend is to run AI within existing workflows while maintaining control over data, logic, and intellectual property. Palantir’s platform precisely addresses this need.
The concept of sovereign AI is also spreading. Enterprises and government institutions are increasingly concerned about data sovereignty in AI deployment, and Palantir’s ability to enable flexible migration and deployment across environments positions it favorably amid growing demand for sovereign AI. Sovereign AI addresses key pain points in enterprise AI deployment, which is why it has become an incremental demand driver. Large enterprises are unwilling to entrust their core business data to third-party model providers or become locked into a single model. They need a platform that can deploy AI across models and environments, and Palantir provides such a unified platform. This forms a moat for Palantir in the competition at the AI application layer.
In terms of the competitive landscape, Palantir’s management emphasizes that its solutions are designed to be portable, providing customers with flexibility. The company must continuously win business through value creation and innovation, rather than relying on lock-in effects. Goldman Sachs notes that competition is intensifying, but Palantir’s differentiation lies in maintaining customer relationships by consistently delivering value, without attempting to lock in clients.
Stock rises 15% after earnings report; Goldman Sachs raises target price to $204
Palantir rose 15% in after-hours trading following its earnings report. Goldman Sachs raised its 12-month price target from $183 to $204, based on a 60x forward free cash flow multiple. With the current stock price at $125.65, the target implies approximately 62% upside potential. While a 60x multiple may seem rich, it represents a reduction from the previous 65x. Goldman Sachs lowered the multiple primarily due to a general decline in peer valuation multiples, not due to deteriorating fundamentals at Palantir. A 60x FCF multiple is a reasonable premium for a company with revenue growth nearing double digits and a net dollar retention rate of 157%.
Simultaneously raised revenue forecasts for 2026 to 2028: 2026 increased from $7.96 billion to $8.37 billion, 2027 increased from $11.59 billion to $12.87 billion, and 2028 increased from $14.85 billion to $16.82 billion.
Goldman Sachs maintains a neutral rating, primarily due to concerns that business growth may slow amid macroeconomic weakness and intensifying competition. Upside risks include continued acceleration in government business and stronger-than-expected expansion of the commercial sales team.
Palantir's financial results were strong. The beat in second-quarter earnings provided short-term validation, while the sovereign AI narrative offers medium- to long-term growth potential. Whether the stock can continue to rise depends on the speed at which the company's enterprise AI strategy is executed.
Disclaimer: This article is a compilation and interpretation by Chaoxiang Research of a third-party brokerage research report (Goldman Sachs, August 4, 2026), combined with publicly available market information. The ratings, price targets, earnings forecasts, and related judgments cited herein reflect the views of the brokerage’s analysts and represent the position of their respective institution, not the views of Chaoxiang Research, nor do they constitute any investment advice. The market carries risks; decisions must be made independently. This article should not be used as a basis for buying or selling any securities.