Palantir’s 93% Growth Meets a 152 Times Multiple

Palantir trades around $177.64 as I write this, at 151.8 times trailing earnings. Revenue grew 93% last quarter. Both of those numbers are true at the same time, and most arguments about this stock pick one and ignore the other.

The stock jumped +29.5% on its August 3 earnings day, well above its own average earnings-day move of 12.8%, which tells you how much the market wanted the growth to be real rather than a one-quarter fluke. I do not read a single day’s move as a verdict on the year ahead. It is a volatility number, not a forecast, and Palantir has a habit of producing large swings in both directions around its reports.

My thesis: Palantir’s government relationships are now the smaller growth story, commercial demand is carrying the number, and the valuation already assumes that split holds for years, which is a taller order than the last two quarters suggest.

Government now needs commercial to keep up

For the quarter, total revenue reached $1.9 billion, up 93% from a year ago and 19% from the prior quarter. Split by segment, US commercial revenue grew 149% year over year to $764 million, while US government revenue grew 90% to $809 million. Total US revenue was $1.573 billion, up 115%.

Government is still the larger of the two segments in dollar terms. But 90% growth on a government book that includes multi-year defense and intelligence agreements is unusual on its own, and it is commercial, not government, that is now setting the pace. Closed commercial deal value came to $2.132 billion for the quarter, up 153% year over year, and the remaining commercial deal value on the books reached $6.238 billion, up 124%. That backlog matters more than any single quarter’s revenue line, because it is the number that tells you whether the growth has a runway or whether this quarter’s print was unusually strong bookings pulled forward.

Part of the commercial acceleration comes down to how Palantir sells now rather than what it sells. The company has spent the past few years pushing prospective customers through short, hands-on pilot programs that put a working piece of software in front of a client’s own data within days instead of the year-long enterprise procurement cycle that used to define this business. I read that shift as the real driver behind the jump in closed deal count, more than any single new product line. A sales motion built around a fast yes is also a sales motion built around a fast no, and Palantir has not yet been through a downturn that tests how many of those quick pilots convert into multi-year renewals rather than one-time budget experiments.

Metric	Value	Context
Revenue (TTM)	$4.5 billion	up 56% from $2.9 billion
Quarterly revenue	$1.9 billion	up 93% year over year
US commercial revenue (quarter)	$764 million	up 149% year over year
US government revenue (quarter)	$809 million	up 90% year over year
Gross margin	82.4%	vs 80.2% a year earlier
Net margin	37%	net income $1.6 billion vs $0.5 billion prior year
P/E (trailing)	151.8	five-year average 160.5
P/S (current)	65.3	five-year average 43.4
Analyst target (avg / high / low)	$201 / $255 / $80	22 analysts, 73% buy-rated

What the guidance raise actually implies

Palantir raised full-year 2026 revenue guidance to between $8.15 billion and $8.16 billion, up from a prior range of roughly $7.65 billion to $7.66 billion. US commercial guidance moved to more than $3.424 billion, which implies growth of at least 134% for the full year. Operating income guidance moved up to between $4.889 billion and $4.897 billion.

I would flag one thing about guidance raises this large. A company does not lift full-year commercial growth guidance to 134% without unusually strong visibility into the pipeline it has already closed, since $6.238 billion of remaining commercial deal value sitting on the books today does most of the work of hitting that number even before a single new contract signs. The risk sits on the renewal and expansion side of existing accounts, not on whether new logos show up.

Even so, guidance is a target management sets for itself, and Palantir has now beaten and raised for several consecutive quarters. That pattern earns some credit. It does not earn unlimited credit, because a raise built mostly on deals already on the books is a different kind of beat than one built on demand nobody saw coming.

The valuation math nobody agrees on

Here is the arithmetic that makes this stock hard to hold with conviction either way. Trailing earnings put the multiple at 151.8 times, well below the five-year average of 160.5 but still expensive by almost any conventional yardstick. On a forward basis, using the current fiscal year’s expected earnings, the multiple compresses to 87.4, which only works if the 74% implied earnings growth actually shows up on schedule. Price to sales tells a similar story: 65.3 currently against a five-year average of 43.4, meaning the market is paying up for growth relative to Palantir’s own history, not just relative to the software sector broadly.

Wall Street’s own price targets show how unsettled this debate is. The average analyst target sits at $201, about 13% above where the stock trades now, but the range runs from $80 on the low end to $255 on the high end, a spread of roughly -55% to 44% from the current price. I have not seen a spread that wide on a large-cap name outside of pre-revenue biotech. The same distance between conviction and consensus shows up in Tesla’s multiple, where the bulls and the skeptics are valuing two different companies inside the same ticker.

There is a simpler way to frame how much the market is paying for growth here. Adding last quarter’s 93% revenue growth to the 32% operating margin gets to a combined score of well over 100, a version of the “Rule of 40” test software investors use to check whether growth and profitability together clear a 40-point bar. Most software companies never approach 60. Palantir is clearing that bar by a wide margin, not just squeaking past it. It is doing so while running a 82.4% gross margin, up from 80.2% a year earlier, and net income of $1.6 billion against $0.5 billion in the prior year. That is a real improvement in the underlying business, not just multiple expansion, and it is the strongest argument the bulls have.

A quant downgrade from C to D

Seeking Alpha’s Quant system, which I picked apart in an earlier review of what its ratings actually capture, moved its rating on Palantir from a C to a D over the recent stretch. That system leans heavily on valuation relative to a stock’s own history and its sector, so a downgrade like that is less a comment on the business and more a statement that the price has outrun the metrics the model tracks. Short interest, for context, sits at a modest 2.7% of the float, which tells me skeptics are mostly staying on the sidelines rather than actively betting against the stock. That is a market that disagrees on fair value without disagreeing enough to short it.

Growth this fast is rare enough on its own. TSMC’s growth rate is not normal for a company its size either, and that comparison is instructive: extreme growth eventually slows toward the market’s average, and the entire valuation argument for Palantir rests on how long the slowdown takes to arrive, not on whether it arrives at all.

I would also weigh the market capitalization directly rather than only the ratios built on top of it. At $426.9 billion, Palantir is priced as one of the more valuable software companies on the planet, ahead of most legacy enterprise software vendors that generate several times its revenue. Multiples compress that comparison into a single number, and single numbers are easy to misread. Seeing the dollar figure in full makes the size of the bet more concrete than any ratio does on its own.

The IRS database problem

There is a cost to the government relationship that does not show up in the margin line, and I think it deserves more attention than it gets in most write-ups of this stock. Palantir has received government payments tied to work helping the IRS build systems that can search and connect taxpayer records across agencies, and that work has drawn direct scrutiny. Congressional Democrats have pressed the company for answers about a reported taxpayer “mega-database,” and privacy advocates including the Electronic Frontier Foundation have argued the tooling creates a serious risk of misuse by agency staff without a documented need to access the data, according to reporting from FedScoop.

None of that shows up in a quarterly revenue line today. But government contracts carry political risk that commercial software contracts mostly do not, and a company whose government segment still grew 90% last quarter is exposed to that risk more than the market currently seems to be pricing. A change in administration, a court ruling, or a damaging leak about how the data has been used could all move the government growth rate in a way that has nothing to do with product quality.

The counter-case and the number I would recheck

If I am wrong about this stock, it is because commercial growth simply keeps compounding at something close to its current rate for another two or three years, in which case today’s multiple looks cheap in hindsight the way Amazon’s multiple looked expensive for a decade before it did not. That is a real possibility with a company converting 82.4% gross margin and 37% net margin at this kind of scale. I would not bet against it happening. I also would not assume it is the base case just because it happened for two quarters in a row.

The specific number I would recheck next is the commercial remaining deal value figure, currently $7.7 billion on an annualized basis. If that backlog keeps growing quarter over quarter the way it has, the guidance raise looks conservative. If it flattens even while headline revenue keeps climbing, that is the first sign the pipeline is thinner than the growth rate suggests, and I would want to know before the next print rather than after it.

Analysis and opinion only, not investment advice. Figures come from Palantir’s quarterly filing on SEC EDGAR and its investor site; valuation multiples and analyst targets were checked on 2026-09-18.