Palantir shares rallied 51.5% in August, recovering from a sector-wide slump, after second-quarter results beat analyst expectations. Revenue grew 93% to $1.94 billion and adjusted earnings per share rose 156% to $0.41, an acceleration even as the company has grown larger.
Palantir Technologies shares rallied 51.5% in August, according to data from S&P Global Market Intelligence, after the company's second-quarter earnings report beat expectations. The rebound follows a stretch in which fears of disruption from leading AI labs had cut Palantir's stock price nearly in half, from its November 2025 highs to its June 2026 lows.
Revenue growth accelerates to 93%
Palantir delivered 93% revenue growth to $1.94 billion in the second quarter, while adjusted earnings per share grew 156% to $0.41, beating analyst expectations on both figures. That marks a stunning acceleration from 48% revenue growth in the year-ago quarter and 85% growth in the first quarter of 2026. Adjusted free cash flow margin also expanded to 63% in the quarter, among the highest in the software industry.
Karp pitches AI control, not exposure
CEO Alex Karp argued Palantir should manage a company's AI problem-solving rather than customers going directly to frontier labs such as OpenAI or Anthropic, saying Palantir is "the only company that has demonstrated it can transform tokens into actual economic value" in the company's earnings call and recent media appearances. He argued that enterprises using leading models directly risk having their data and use cases learned by those models, which could theoretically improve the models and spread that knowledge to competitors.
Commercial demand outpaces spending
The pitch appears to be resonating: U.S. commercial customers grew 149% year over year. Sales and marketing expenses, however, grew less than 40% over the past year, including stock-based compensation.
Palantir's shares now trade at 78 times forward earnings, based on 2026 estimates, a valuation that hinges on the company continuing to accelerate growth off an ever-higher base. Growth-oriented investors may still find the shares appealing despite August's rally, the Fool's analysis suggests.
Source: The Motley Fool
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