Palantir Technologies (PLTR +29.06%) stock charged sharply higher Tuesday, climbing as much as 27.7%. As of 11:36 a.m. ET, the stock was still up 26.3%.
The catalyst that sent the data mining and artificial intelligence (AI) software specialist higher was its quarterly financial report, which helped quash concerns about a looming AI slowdown.
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A classic beat and raise
Palantir continues to defy detractors who believe that the company's results simply can't get any better.
For the second quarter, Palantir delivered personal best revenue of $1.94 billion, an increase of 93% year over year and 19% quarter over quarter. This marked the 12th successive quarter of accelerating growth. This drove adjusted earnings per share (EPS) of $0.41. Analysts' consensus estimates called for revenue of $1.81 billion and EPS of $0.35, so the results exceeded Wall Street's already lofty expectations.
The company's Artificial Intelligence Platform (AIP), which uses company-specific data to aid in decision-making, continued to fuel Palantir's impressive growth. While U.S. government revenue of $809 million climbed 90%, U.S. commercial revenue -- which includes AIP -- soared 149% to $764 million and is poised to overtake government contracts as the company's largest growth driver, likely before the year is through.
Beyond the accelerating revenue growth, one of the more telling trends is Palantir's expanding margins. The company's gross profit margin climbed to 84.7%, up from 80.8% in the prior-year quarter, while its net profit margin rose to 55.1%, up from 32.7%. This illustrates how effectively Palantir can scale its operations.
NASDAQ: PLTR
Key Data Points
Management raised its full-year guidance for 2026, forecasting full-year revenue of $8.15 billion, representing 82% growth and well ahead of Wall Street's consensus estimates of $7.72 billion.
In the wake of its impressive performance, analysts scrambled to update their models, driving numerous upgrades and price target increases.
To be clear, the stock won't be for everyone, as it's wildly expensive when measured by the most widely used valuation metrics. For example, Palantir is selling for 136 times earnings and 108 times next year's expected earnings. However, the price/earnings-to-growth (PEG) ratio, which is more appropriate for high-growth stocks, returns a multiple of 0.47, when any number lower than 1 is the standard for an undervalued stock.
Furthermore, if Palantir continues to accelerate its grow at its current pace, its current valuation could be a bargain.
