Investment Strategist
Palantir’s growth jumps, led by United States commercial demand and strong cash generation.
Guidance implies momentum continues, but expectations and valuation leave little room for stumbles.
Watch customer growth, deal sizes, and stock-based compensation as closely as revenue.
Palantir has always had a “black box” reputation. It sells software that helps organisations pull messy data together and make better decisions, often in high-stakes settings like defence, intelligence, and large companies with complex operations.
This quarter is different because it is less about mystery and more about receipts. Palantir’s numbers show that its Artificial Intelligence Platform (AIP, its tools for building and running artificial intelligence in real workflows) is not just a demo. It is showing up in revenue, contracts, and cash.
Palantir reports Q4 2025 revenue of 1.407 billion USD, up 70% year on year and up 19% quarter on quarter. That is the headline, but the texture matters more for long-term investors.
The centre of gravity shifts towards the United States commercial business. That is the part of Palantir where adoption can spread customer by customer, rather than contract by contract. The quarter suggests that this engine is not only running, but gaining speed. Government demand also stays firm, which matters because it gives Palantir a stable base while commercial momentum does the heavy lifting.
Put simply: both sides of the business grow, but the commercial side now sets the pace. That is important for long-term investors because it is usually the difference between “a specialist supplier” and “a platform that becomes a habit”.
The most revealing line is still cash. Palantir does not just book revenue, it turns a large share of it into cash quickly. That matters because cash is harder to “polish” than profits, and it funds growth without constant fundraising. If revenue is the applause, cash is the ticket sales.
Over the full year, the same pattern holds. Growth stays strong and cash generation stays unusually high for a fast-growing software company. That mix is exactly why the market keeps debating valuation: investors are not only paying for growth, they are paying for the idea that the growth is real, repeatable, and self-funded.
It helps to think of Palantir as selling “decision infrastructure”. Many companies already have data. What they struggle with is turning that data into actions that people trust, can repeat, and can audit later.
That is where AIP fits. It is Palantir’s effort to make artificial intelligence useful inside real organisations, not just impressive in a lab. The commercial acceleration suggests that buyers are moving from pilots to production. In other words: fewer “proof of concept” projects, more “this is how we run the business” contracts.
The contract data supports that reading. Palantir closes a record 4.262 billion USD of total contract value (TCV, the total value of contracts signed in the period), up 138% year on year. It also reports 180 deals of at least 1 million USD, and 61 deals of at least 10 million USD.
This matters because software stories can look strong for a quarter and then fade. Bigger contracts, plus rising customer count, are the early signs that a product is becoming a habit. Customer count grows 34% year on year.
Palantir’s guidance is bold, and it raises the bar for execution.
For the first quarter of 2026, Palantir guides revenue to 1.532 to 1.536 billion USD, which is above Bloomberg expectations. For full-year 2026, it guides revenue to 7.182 to 7.198 billion USD, also ahead of Bloomberg consensus.
The most ambitious part sits in the engine room: Palantir expects United States commercial revenue above 3.144 billion USD for 2026. That implies at least 115% year on year growth. In plain terms, management is not just saying demand exists. It is saying demand scales quickly, and it is willing to be measured on it.
So what should readers actually watch when the next quarter lands? First, watch whether commercial growth stays broad. It is easy to grow quickly if two or three very large customers sign bigger cheques. It is harder, and healthier, if growth comes from more customers, more use cases, and steady expansions. Second, watch “cash conversion”. Palantir’s story works best when revenue turns into cash without drama. If cash stays strong while the company hires, sells more, and delivers more, it supports the idea that this is scalable software, not expensive consulting in disguise. Third, listen for the tone around deal timing. When a company grows this fast, a small shift in customer decisions can move a whole quarter. Strong commentary on renewals and expansions is reassuring. More talk about “later this year” and “pipeline” is a yellow flag, even if the long-term story sounds exciting.
The investor question is not “can it grow?” The quarter suggests it can. The real question is “can it scale cleanly?”, with growth that stays broad, repeatable, and cash-backed.
The first risk is valuation.
Even after this quarter, Palantir still trades like a company that must keep delivering big beats. An early warning sign is not “slower growth” by itself, but management shifting from confident near-term delivery to broader long-term speeches.
The second risk is political and reputational heat.
Palantir’s government work attracts scrutiny, including around surveillance and immigration enforcement. An early warning sign is contract noise turning into customer hesitation, or a slower pace of new government awards.
The third risk is quality of growth.
Fast commercial growth is great, but investors still need to see durable economics: renewals, expansions, and lower reliance on large one-off deals. An early warning sign is strong bookings today without matching revenue and cash later.
Palantir’s story used to be hard to pin down: powerful technology, big claims, and a lot of debate. This quarter makes the story easier, because it looks like a business that sells outcomes, signs larger contracts, and turns those contracts into real cash.
Now comes the part that separates great software companies from exciting ones. Palantir needs to prove that its Artificial Intelligence Platform becomes a repeatable habit across many customers, not just a few headline deals. It also needs to grow without letting stock-based compensation or political controversy become the hidden tax on that growth.
If it does, the “black box” becomes something far less dramatic and far more valuable: a steady machine that prints receipts.
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