To even have a chance of living up to its extraordinarily high valuation, Palantir (PLTR -1.52%) had to deliver another fantastic quarter when it reported earnings on Monday -- and preferably one featuring accelerating revenue growth. Fortunately for shareholders, that's exactly what the AI (artificial intelligence) data platform company did.
Not only did Palantir's fourth quarter deliver massive revenue acceleration, but the company also provided impressive guidance for its fiscal quarter of 2026 and the full year.
With growth accelerating, is the growth stock a buy? Or is its valuation simply too high?
To fully grasp whether the stock is worth paying for at its current price, investors need to first carefully examine the company's mind-boggling growth, because it truly is exceptional.
Image source: Getty Images.
Accelerating growth
Capturing Palantir's staggering momentum, its fourth-quarter revenue came in at $1.407 billion -- up 70% year over year and 19% sequentially. Further, the quarter's top-line growth rate accelerated significantly from Q3, when revenue grew 63% year over year to $1.181 billion.
Palantir's U.S. business continued to be a driving force. Its revenue grew 93% year over year in the fourth quarter to $1.076 billion, and U.S. commercial revenue grew 137% year over year to $507 million.
But there's a new important catalyst worth calling out for Palantir in its fourth-quarter results. Its U.S. government revenue grew 66% year over year to $570 million. This was a massive acceleration from 52% growth in the prior quarter. And this acceleration reverses a decelerating trend for Palantir's U.S government revenue in the prior quarter.
"The strength of our U.S. government results reflects a fundamental reality," explained Palantir chief revenue officer Ryan Taylor during the company's fourth-quarter earnings call. "In an era of intensifying global threats and budgetary pressure, the government is turning to software that actually works as speed, precision, and decision advantage are paramount."
Boding well for the company's future growth potential, Palantir's deal activity also notably soared. Its total contract value in Q4 was about $4.262 billion -- up 138% year over year, and U.S. commercial total contract value, specifically, was $1.344 billion, up 67% year over year. Palantir also said it closed 180 deals of at least $1 million, 84 of at least $5 million, and 61 of at least $10 million.
Notably, however, Palantir's customer count growth slowed, even as revenue growth accelerated. Customer count was up 34% year over year at the end of the fourth quarter of 2025, versus 45% growth in Q3.
Impressive profitability
The company's profitability also impressed.
Palantir's income from operations for the period was $575 million, giving the tech company a 41% operating margin for the period. This was a huge improvement from a 33% operating margin in Q3. Additionally, its non-generally accepted accounting principles (non-GAAP) operating margin similarly improved significantly, rising from 51% in Q3 to 57% in Q4.
Cash generation also stepped up. Palantir's fourth-quarter adjusted free cash flow was $791 million (56% of revenue). This was up from third-quarter adjusted free cash flow of $540 million (46% of revenue).
An upbeat outlook
All of this momentum positions Palantir for a big 2026, as management confirmed in its fourth-quarter update. For Q1, Palantir guided to revenue of $1.532 billion to $1.536 billion, with the midpoint implying about 74% growth. And for the full year of 2026, management guided to revenue between $7.182 billion and $7.198 billion, implying about 61% growth.
Regarding its outlook for profitability, management expects positive GAAP operating income and net income in every quarter of 2026.
And here's probably the most exciting part of Palantir's full-year guidance: Management said it expected its U.S. commercial revenue for the period to rise at a rate of at least 115% year over year.
NASDAQ: PLTR
Key Data Points
Is now a good time to buy Palantir stock?
Still, are shares really worth a price-to-earnings ratio of more than 240 as of this writing? Even the stock's forward earnings ratio, which looks at a stock's price as a multiple of analysts' consensus forecast for earnings per share over the next 12 months, sits at about 160 as of this writing.
Do I think the stock is worth such a high price?
No.
Is there a small chance this great business does live up to its valuation today? Of course. But I believe the chance is only small, rendering the stock's risk-reward profile poor.
