Palantir’s fourth-quarter results mark a clear shift in how the company is positioned. What was once viewed primarily as a niche government software provider now looks increasingly like a core beneficiary of commercial AI adoption in the United States. Revenue growth has accelerated to levels rarely seen in large-scale software, profitability has reached new highs, and guidance signals that AI is no longer a promise but a revenue engine.
The market response, however, is more complex than pure enthusiasm. With valuation and expectations now elevated, the margin for error has narrowed significantly. The results serve not only as confirmation of Palantir’s operating strength, but as an early test of whether its growth rate, margins, and operating leverage can be sustained beyond the initial surge of AI-driven demand.
How was the last quarter?
The fourth quarter of 2025 was exceptional from a Palantir $PLTR perspective on virtually every key metric. Revenue was $1.41 billion, representing 70% year-over-year growth and 19% quarter-over-quarter acceleration. This growth was driven not by a one-off order, but by broad-based demand, particularly in the US market, where Palantir is becoming the de facto standard for deploying AI in real-world operational processes.
US revenues grew 93% year-on-year to $1.08 billion, with the commercial side of the US business exploding at a 137% rate to reach $507 million. US government contracts grew more slowly but still very robustly, specifically up 66% to $570 million. Importantly, the growth is not just volumetric, but structural - Palantir awarded 180 contracts worth more than $1 million in the quarter, with 61 of those contracts exceeding $10 million. The total value of contracts closed reached a record $4.26 billion, an increase of 138% year-on-year.
The company's profitability literally shot up this quarter. GAAP operating profit was $575 million, equivalent to an operating margin of 41%. On an adjusted basis, operating profit was $798 million and operating margin was 57%, levels Palantir has never historically achieved. GAAP net income was $609 million, a 43% net margin, and adjusted earnings per share were $0.25.
The cash flow confirms that this is not an accounting illusion. Operating cash flow in the quarter was $777 million, a 55% margin, and adjusted free cash flow was $791 million. The company ended the year with $7.2 billion in cash and short-term U.S. Treasury bonds, no funding pressure, and significant room for further expansion.
CEO outlook and commentary
CEO Alex Karp did not hide his confidence in his comments and interpreted the results as a confirmation of the company's unique strategy. He emphasized that Palantir is consciously focused solely on monetizing the operational leverage enabled by rapid advances in AI models, and referred to this trend as "commodity cognition" - a state where AI capabilities are becoming widely available, but real value is only created by integrating them into real-world processes.
The outlook for 2026 is extremely aggressive. The company expects full-year revenues in the range of $7.18 billion to $7.20 billion, implying year-over-year growth of approximately 61%. U.S. commercial sales are expected to exceed $3.14 billion, implying growth of at least 115%. Adjusted operating profit is expected to be between $4.13 billion and $4.14 billion and free cash flow is expected to reach $3.9 billion to $4.1 billion. In addition, management expects GAAP operating profit and net income in every single quarter of 2026.
Long-term results and business development
A look at the long-term numbers shows that the current explosion is no accident. Palantir's revenue grew from $1.54 billion in 2021 to $1.91 billion in 2022, $2.23 billion in 2023, and $2.87 billion in 2024. While the rate of growth varied from year to year, the key turning point was in profitability.
While in 2021 and 2022 the company was generating significant operating losses and net profit was deep in the red, 2023 marked the first stabilization and 2024 has already brought a net profit of $462 million. Operating profit more than tripled between 2023 and 2024 and EBITDA moved into positive territory with strong growth momentum. This shift is the result of a combination of higher average contracts, recurring revenue and dramatic improvements in operating efficiency.
At the same time, it is important to mention the negative side of the long-term development - shareholder dilution. The average number of shares outstanding has grown at a rate of 4-7% per annum in recent years, partially dampening earnings per share growth. However, the current level of profitability is beginning to override this effect, with EPS increasing significantly faster than the number of shares in 2024 and 2025.
Shareholder structure
The shareholder structure remains strongly institutional, with institutions holding around 60% of the shares. The largest shareholders are Vanguard, BlackRock and State Street, followed by JPMorgan and several other large asset managers. Insider holdings exceed 3.5%, which for a technology firm of this size still represents a relatively significant alignment of management interests with shareholders.
Expectations of anayltics
Analyst Consensus (overall sentiment): The average 12-month target price for Palantir stock is around $189-$192, implying roughly ~28-30% potential upside.
Bank-specific recommendation: Bank of America raised PLTR's target price from $215 to $255 and maintained a Buy rating on the stock given strong segment growth and revenue outlook for 2026.