Palantir Technologies surged 11% in premarket trading after delivering fourth-quarter results that exceeded Wall Street expectations amid growing demand for artificial intelligence tools.
The company reported $1.41 billion in revenue, comfortably ahead of LSEG estimates of $1.33 billion, marking a strong rebound after a volatile end to 2025.
November had represented Palantir’s weakest month in two years as broader concerns around an AI valuation bubble dragged software stocks lower across global markets.
Despite those concerns, Palantir finished 2025 up 135%, although shares had still fallen 17% year-to-date before the earnings announcement.
Government Contracts Continue To Power Revenue Growth
Chief executive Alex Karp described the performance in emphatic terms during an interview, highlighting what he called unprecedented momentum in technology sector results.
He stated: “the best results that I’m aware of in tech in the last decade.”
Palantir’s software and data platforms are widely used by U.S. government agencies including the Department of Defense, Internal Revenue Service, and Department of Homeland Security.
Karp noted that adoption of its tools across government departments delivered 66% year-on-year revenue growth, underlining how public sector demand is accelerating.
Major agreements have included a software contract worth up to $10 billion with the U.S. Army and a $448 million deal with the U.S. Navy to support shipbuilding operations.
Analysts See Margin Expansion Despite Valuation Concerns
Analysts acknowledge that Palantir’s valuation remains elevated, yet some believe it is becoming more justifiable relative to recent funding rounds for AI-focused companies.
Louie DiPalma of William Blair suggested operating margins could rise from 50% to 65% over the next five years as defense and government partnerships expand further.
At the same time, Palantir’s involvement with U.S. Immigration and Customs Enforcement has attracted scrutiny following controversial incidents involving federal agents in Minneapolis.
This backdrop adds a political and ethical dimension to a company whose rapid growth is increasingly tied to sensitive public sector operations.
