Palantir Q4 Blows Past Estimates With 70% Revenue Growth
Defense tech darling reports record $1.41B revenue, guides FY26 to $7.2B. U.S. commercial business grows 137% as AI platform adoption accelerates.
Palantir just put up the kind of quarter that makes skeptics reconsider their thesis.
The AI software company reported Q4 revenue of $1.41 billion—up 70% from a year ago and well ahead of the $1.33 billion analysts expected. Net income hit $608 million, compared to just $79 million in the same period last year. Shares jumped 11% in after-hours trading Monday.
But the headline numbers only tell part of the story. It's the forward guidance that has Wall Street scrambling to update models.
The Numbers That Matter
Palantir guided fiscal 2026 revenue to $7.18-7.20 billion. The Street was at $6.22 billion. That's not a beat—it's a different stratosphere.
For Q1 alone, management expects $1.53-1.54 billion, versus consensus at $1.32 billion. If that seems aggressive, consider that Palantir has beat expectations for 10 consecutive quarters. At some point, the pattern becomes the baseline.
The Rule of 40—a SaaS metric combining revenue growth and profit margin—hit 127 in Q4. For context, most high-growth software companies target 40. Palantir is running at triple that.
U.S. Commercial: The Engine
The U.S. commercial segment grew 137% year-over-year. Revenue from this business crossed $1 billion for the first time in a single quarter.
That's significant because commercial was Palantir's weakness for years. Government contracts provided steady revenue, but the company struggled to sell to enterprises. The AIP platform—which helps companies deploy large language models—changed that equation.
Management guided U.S. commercial revenue to exceed $3.14 billion for the full year, implying at least 115% growth. They're betting the AI tailwind has years to run.
As we noted in yesterday's earnings preview, the Street was watching U.S. commercial closely. Palantir delivered.
Government Remains Strong
The government business isn't slowing either. Q4 government revenue grew 60% year-over-year to $730 million. Full-year government revenue hit $2.4 billion, up 53%.
Defense spending under the current administration remains elevated, and Palantir has positioned itself as a preferred vendor for AI-enabled intelligence and logistics platforms. The company has contracts with the Army, Air Force, and multiple intelligence agencies.
The Valuation Question
Here's where it gets uncomfortable. Palantir trades at roughly 40x forward revenue on the new guidance. That's expensive by any historical measure.
Jefferies analyst Brent Thill maintained his hold rating despite the beat. "PLTR has delivered 10 consecutive quarters of growth acceleration," his team noted. "Comps will only continue to get more demanding."
The bull case: Palantir is becoming the operating system for enterprise AI. If that thesis plays out, today's valuation looks cheap.
The bear case: Nothing grows 70% forever. Eventually, the law of large numbers catches up. And at these multiples, any stumble gets punished severely.
What Changes
Palantir enters 2026 having proven it can scale commercial revenue alongside government contracts. The AIP platform has product-market fit. Margins are expanding.
The stock will likely gap up significantly at the open. Whether it holds depends on whether investors believe Palantir can keep delivering these kinds of surprises—or whether this quarter represents peak momentum.
For more on the broader earnings season, several Magnificent Seven names report later this week, including Alphabet and Amazon.