Palantir Q4 Revenue Surges 70%. AI Monetization Accelerates, Controversy Also Escalating?

TradingKey - Palantir ( PLTR) released strong fourth-quarter earnings after the bell on Monday, with both revenue and profit exceeding market expectations. At the same time, its future guidance was significantly higher than analyst estimates, driving the company's stock price up by approximately 7% in after-hours trading.

Financial data showed that total Q4 revenue reached $1.41 billion, a year-on-year increase of 70%, which was significantly higher than the analyst consensus of $1.34 billion, representing a beat of approximately 4.9%. Driven by the dual engines of commercial business expansion and government contract growth, the company demonstrated exceptional execution and revenue momentum this quarter.

All business lines performed impressively, particularly the U.S. commercial market, which grew 137% year-over-year to $507 million, not only far exceeding market estimates of $479 million but also becoming the core driver of growth for the quarter. The U.S. government business was also strong, achieving a 66% year-over-year increase with revenue reaching $570 million, also higher than the expected $522 million. A key development this quarter also included Palantir winning a significant contract for the U.S. Navy's ShipOS software.

Driven by strong growth, adjusted earnings per share (EPS) came in at $0.25, surpassing the market expectation of $0.23 by 8.6%. Furthermore, the total value of the company's unfulfilled U.S. commercial contracts soared 145% year-over-year this quarter to $4.38 billion, revealing potential for future revenue prospects.

Read more: " Palantir Q4 Earnings Preview: How Much Further Can the AI Boom Go? Earnings Will Give the Answer. "

Management revealed during the conference call that the total value of contracts signed hit a record high of $4.26 billion, reflecting the continuous increase in the customer penetration rate of its AI platform across various scenarios. CFO David Glazer stated that Palantir's Artificial Intelligence Platform (AIP) has become a core tool for improving customer operational efficiency because it can deeply integrate Large Language Models (LLMs) with internal corporate data and operate stably within controlled parameters, with demand now accelerating.

CEO Alex Karp stated that the company currently scores 127% according to the "Rule of 40," which is the sum of the revenue growth rate and the adjusted operating margin. He said this performance indicates that Palantir is achieving a healthy balance between high-speed growth and sustainable profitability.

Analysts believe that the highlights of this earnings report are not just the beats in revenue and profit, but more importantly, the demonstrated ability to continuously expand at the business level, the enhanced commercial conversion capability of the AI platform, and increasing customer stickiness.

Against the backdrop of increasing market concerns regarding the volatility of tech growth stocks, Palantir's earnings report undoubtedly sends a positive signal to investors.

Palantir Deeply Rooted in the Government Market

Palantir has long been deeply involved in the government data sector, building a leading advantage in defense, security, and law enforcement sectors based on its early and continuous investment in AI technology. The company deeply integrates AI capabilities into government information systems, intelligence analysis, and military applications, positioning itself as a core player in "government AI infrastructure."

CEO Alex Karp stated during the earnings call that it was the company's early positioning in the AI field that allowed Palantir to build a scalable technological advantage while most competitors are still struggling to catch up.

"Companies that haven't adopted AI are falling behind; they hope to catch up, but the technological paths many have chosen are damaging their own profitability. If a company has revenue but is destined to be unprofitable, then that revenue is worthless," he said.

As a star stock in the AI sector, Palantir's stock price has soared over 800% cumulatively over the past two years, with its market value increasing by more than $315 billion. The strong revenue growth in the government sector in the fourth quarter reaffirms this trend.

Recently, the company signed a major contract worth up to $448 million with the U.S. Navy for submarine maintenance and upgrades. Additionally, the company had previously reached a long-term technical cooperation agreement with the U.S. Army worth up to $10 billion to provide data integration and battlefield decision support systems.

Karp noted that the U.S. government's adoption of the Palantir platform is deepening rapidly—'America has become more lethal and more confident, and is gradually distancing itself from adversaries and even some allies.' He stated that due to continued high demand for defense-related services, the company has postponed some international business initiatives to prioritize domestic project requirements.

Palantir and ICE Controversy

However, the company's ongoing collaboration with U.S. Immigration and Customs Enforcement (ICE) has also sparked intense controversy.

According to disclosures, since the beginning of 2025, Palantir has signed over $81 million in technology contracts with ICE, covering projects related to the screening, tracking, and data integration of undocumented immigrants. One contract reached in April 2023 was worth as much as $30 million and is considered ICE's largest system construction project since 2011.

This collaboration began as early as the Trump administration. Founder Peter Thiel's close relationship with the Trump administration paved the way for the company to secure substantial government resources and orders. Media outlets generally view Palantir as a direct beneficiary of the U.S. national AI strategy.

In January of this year, a serious incident occurred in Minneapolis during an ICE enforcement action, where two U.S. citizens were shot and killed by federal immigration officers, triggering nationwide protests. This also subjected Palantir, which provides technical support, to intense moral criticism. Some politicians, public organizations, and former employees have harshly criticized the company for 'facilitating government technological abuse,' intensifying the controversy surrounding the company's ethical boundaries.

Palantir has defended its partnership with ICE on several public occasions, with CEO Karp emphasizing that the company always takes data privacy protection very seriously and ensures through product design that the government is only granted minimal permissions. He stated, 'If you criticize ICE, then you should argue for more Palantir. Our platform inherently requires users to comply with the Fourth Amendment's privacy protections.'

Palantir Caught Between Bubble and Value

Despite Palantir's strong revenue and profit growth momentum in its recent earnings report, the debate over whether it is "overvalued" persists, keeping this star AI company in a long-term tug-of-war between "hype" and "value."

Over the past year, Palantir's stock has risen a cumulative 81%, reaching an all-time high of $207.52 in November 2025. However, since then, the company's stock has experienced a correction, with a cumulative decline of nearly 30%, and it has also fallen about 15% since the beginning of 2026. Despite increased volatility, its current market capitalization remains at approximately $350 billion, placing it firmly among the highest-valued companies in the S&P 500 index.

As early as November 2025, hedge fund manager Michael Burry, who became famous for successfully shorting the subprime mortgage market during the financial crisis, publicly disclosed a short position on Palantir and warned on social media that the AI sector was forming a new asset bubble. Market sentiment was significantly impacted at the time, and Palantir's stock recorded its worst monthly performance in two years.

Facing skepticism, Karp responded strongly at the time, calling the short-selling behavior "insane" and publicly alleging "market manipulation."

In his latest letter to shareholders, he continued to emphasize that the company's profits "are real and not the result of manipulation," stating frankly that the company's products have become an indispensable structural pillar in Large Language Model applications. He wrote: "Companies that lack a fanatical focus on the value these systems create, while being unable to actually 'catch the mice,' will eventually fade from view and be forgotten."

The root of the valuation controversy lies in the fact that while the company continues to achieve AI monetization in both commercial and government customer markets, its forward P/E ratio remains extremely high. According to media reports citing inflation-adjusted FactSet data, since 1984, no S&P 500 company has reached the heights Palantir currently occupies in terms of the relative ratio of "valuation to revenue scale."

Supporters believe that AI is no longer a short-term theme but a long-term engine driving corporate digitization and intelligence, with Palantir at the center of this trend. As the company continues to push for AI implementation in complex scenarios such as military, healthcare, and energy, its growth structure is expected to continue strengthening, and high growth rates will gradually digest valuation pressures.

Cautious analysts, however, warn that even with technological leadership, it may be difficult to sustain a P/E ratio in the hundreds. Once revenue growth slows or the AI industry cycle enters a cooling period, a "reversion" in valuation could become the core variable suppressing the stock price.

However, some market views are beginning to turn positive. William Blair analyst Louis DiPalma recently upgraded Palantir's stock rating from "Market Perform" to "Outperform," believing that the previous correction has brought the valuation back into a more reasonable range.

Karp continued to emphasize that Palantir is not a product of AI hype but a company that delivers real results in both profitability and growth. In the latest conference call, he dismissed allegations of "round-tripping" or companies investing in customers to stimulate AI orders. He stated, "We provide the service first before we can get paid, and we were indeed paid enormous sums last year. This is absolutely not a circular payment relationship."

The company's future guidance further consolidated bullish sentiment. Palantir expects first-quarter revenue to be between $1.532 billion and $1.536 billion, far exceeding the market expectation of $1.32 billion. For the full year 2026, revenue is projected to reach between $7.182 billion and $7.198 billion, higher than the FactSet consensus of $6.22 billion.

The balance between bubble and value will be determined by the delivery of results over the coming quarters. Whether high-speed growth can be sustained will be the key test of whether Palantir can navigate through the bubble cycle.