Palantir Shares Surge on Strong Earnings, Bolstered by Government AI Spending

Palantir Technologies Inc. saw its stock jump 7% Tuesday following a fourth-quarter earnings report that exceeded analyst expectations. The data analytics firm reported revenue of $1.41 billion, topping forecasts of $1.33 billion, with adjusted earnings per share of 25 cents against an expected 23 cents.

The results mark a sharp rebound from a difficult period late last year. November 2025 was Palantir's worst month in two years, part of a broader software sell-off driven by concerns over inflated AI valuations. Despite gaining 135% over the full course of 2025, the stock had been down 17% for 2026 prior to this week's rally.

Chief Executive Alex Karp, in an interview with CNBC, called the quarter's performance "the best results that I'm aware of in tech in the last decade." He highlighted a 66% year-over-year increase in revenue from U.S. government contracts. Palantir's software is used by agencies including the Department of Defense, the IRS, and the Department of Homeland Security.

Government and defense work continues to be a major growth engine. The company secured a potential $10 billion software contract with the U.S. Army last July and a $448 million deal with the Navy in December to speed shipbuilding. Analyst Louie DiPalma of William Blair noted that while Palantir's valuation remains high, it looks more measured compared to recent funding rounds for other AI-focused firms. DiPalma projects the company's operating margin could climb from 50% to 65% over the next five years as these contracts expand.

The company's work, particularly with U.S. Immigration and Customs Enforcement, has faced increased public scrutiny in recent weeks following the shooting of two protesters by federal agents in Minneapolis.

Source: CNBC