Shares of Palantir Technologies (PLTR 1.52%) have shed 20% of their value in 2026 as of this writing, driven mainly by the broader weakness in artificial intelligence (AI) stocks and the company's expensive valuation.
However, Palantir stock could get a big shot in the arm when the company releases its second-quarter results on Aug. 3. Let's see why that's likely to be the case.
Image source: The Motley Fool.
Software stocks are winning back investor confidence
This has been a difficult year for software stocks. The sector has taken a beating amid fears that the advent of agentic AI could upend the traditional software industry. However, software stocks seem to be gaining popularity among investors once again.
NASDAQ: PLTR
Key Data Points
The iShares Expanded Tech-Software Sector ETF, an exchange-traded fund that invests in North American software, media, and services companies, has appreciated 9% over the past three months. Even Palantir stock has recovered 26% from the 52-week low it reached on June 25.
This turnaround in software stocks can be attributed to a change in perception, as investors now believe that integrating AI tools can be beneficial for software-oriented businesses. Palantir is a classic example of how offering AI solutions to customers can significantly accelerate a company's growth. The company's growth rate has picked up impressively since the launch of its Artificial Intelligence Platform (AIP) just over three years ago.
Data by YCharts
Palantir's customers have seen significant improvements in productivity by deploying its AI tools, which is why they have been spending more on its offerings. This is why I believe Palantir could crush Wall Street's expectations once again on Aug. 3 and raise its guidance.
Palantir's potential beat-and-raise quarterly report could give the stock a big boost
Palantir's earnings have exceeded Wall Street's expectations in each of the last four quarters. That trend is likely to continue, as the company is getting more business than it can fulfill. This is evidenced by Palantir recording new contracts worth $2.41 billion in Q1, up 61% from the year-ago period. That was higher than the $1.63 billion revenue the company clocked during the quarter.
Palantir's remaining deal value (RDV), which is the total value of contracts yet to be fulfilled, increased by 98% year over year to $11.8 billion, exceeding the 85% increase in revenue. The strong deal momentum and the addition of new customers encouraged Palantir to raise its guidance. A similar situation could unfold on Aug. 3, and this time, the market could reward Palantir for its improving growth trajectory.
After all, Palantir is among the leading players in the fast-growing AI software market, which is expected to see a whopping 12x increase in revenue between 2024 and 2034, according to a third-party estimate. Palantir's addressable opportunity could jump to $237 billion in 2034, indicating that it is at the beginning of a terrific growth curve that will help justify its valuation.
A strong set of results and guidance next month should reinforce Palantir's growth prospects and further enhance investor confidence in the stock. For all these reasons, I believe the recent rally in Palantir could continue, and the software specialist may even see a parabolic move in its stock price.
