One of the best artificial intelligence (AI) stocks on the planet is having a rough time in recent weeks. Despite massive growth and promise, the company's stock dropped 10% over the last month and is now about 21% below its all-time high.
Granted, this company has many detractors -- both for its eye-watering valuation and as a potential victim of the so-called AI bubble. But I'm not giving up. In fact, I believe this stock is poised for a significant comeback and is likely to set new all-time highs in 2026.
Let's take a closer look at Palantir Technologies (PLTR +1.62%)
Image source: Getty Images.
Palantir, in the words of Alex Karp
Palantir is a software and data-mining company that uses AI and thousands of data points to provide actionable insights in real time to both government agencies and commercial customers. Essentially, Palantir's software analyzes data, finds patterns, and helps users predict outcomes, run simulations, and act.
But how it works isn't easy to describe. Even its CEO, Alex Karp, was pretty non-specific when questioned by Wired. Here's his word-for-word response when asked to describe what Palantir does:
"If you're an intelligence agency, you're using us to find terrorists and organized criminals while maintaining the security and data protection of your country. Then you have the special forces. How do you know where your troops are? How do you get in and out of the battlefield as safely as possible, avoiding mines, avoiding enemies? Then there's Palantir on the commercial side. The shorthand is if you're doing anything that involves operational intelligence, whether it's analytics or AI, you're going to have to find something like our products."
That's why the company's bootcamps have been effective. Palantir has been rolling out its Artificial Intelligence Platform (AIP) in five-day bootcamps to demonstrate to potential customers how its generative AI-powered platforms can enhance their businesses. The events help customers understand how AI can best work for them, develop initial use cases for the software, and train users on it.
That's an amazingly quick turnaround, which is why Palantir has been growing so fast -- particularly in the commercial segment.
|
Time Period |
U.S. Commercial Customers |
Percentage Increase (Quarter Over Quarter) |
|---|---|---|
|
Q4 2024 |
382 |
19% |
|
Q1 2025 |
432 |
13% |
|
Q2 2025 |
485 |
12% |
|
Q3 2025 |
530 |
9% |
Data source: Palantir
Palantir's U.S. commercial customer count grew 65% in the last year, which is fabulous growth for a company that's long been known as a government contractor. Palantir reports that its U.S. commercial revenue increased 121% year over year to reach $397 million.
"This segment of our operations is an absolute juggernaut," Karp said in a letter to shareholders. "And we believe that it will become, on its own, one of the most significant business stories of the century in American economic life."
|
Time Period |
U.S. Commercial Revenue |
Percentage Increase (Quarter Over Quarter) |
|---|---|---|
|
Q4 2024 |
$214.2 million |
19.5% |
|
Q1 2025 |
$255.5 million |
19.2% |
|
Q2 2025 |
$306.5 million |
19.9% |
|
Q3 2025 |
$396.7 million |
29.4% |
Data source: Palantir
It reported closing 204 deals in the third quarter with values of at least $1 million, with 91 of them valued at $5 million-plus and 53 at more than $10 million. Palantir doesn't break down how many of those deals are commercial versus government, but it's clear the commercial side is growing fast. U.S. government work was up 52% from a year ago, accounting for $486 million of Palantir's revenue.
NASDAQ: PLTR
Key Data Points
What can we expect from Palantir?
Palantir issued guidance for the fourth quarter, calling for revenue between $1.327 billion and $1.331 billion. At the midpoint, that would represent a 60% increase in revenue from Q4 2024, when it reported revenue of $828 million. It's projecting adjusted income in the range of $695 million and $699 million -- at the midpoint, that would be an 86.6% jump from Q4 2024 adjusted income of $373 million.
The full-year guidance is just as impressive. Revenue between $3.741 billion and $3.757 billion would be up an incredible 97% from a year ago, while adjusted income in the range of $2.151 billion and $2.155 billion would be up 90% from 2024.
This rapid growth -- and the demonstrated success of and demand for Palantir's programs on the commercial side -- are why I'm not as concerned as other analysts about the company's valuation. It includes a forward price-to-earnings ratio of 230 and a forward price-to-sales ratio of 90.
Simply put, Palantir is making moves that nobody has seen before. As companies become increasingly desperate to incorporate AI into their businesses, Palantir's platform offers truly unique and effective solutions.
It has to continue to execute perfectly -- and that's on Karp on his team to deliver. But when they do, Palantir stock will prove to be a steal right now at 20% below its all-time high, and why I expect it to set new highs in 2026.
