Strong AI demand drives Palantir to a record quarter

Results mainly due to robust growth in US government contracts

Trade

Alex Karp, Palantir

Palantir Technologies performed substantially better in the fourth quarter than Wall Street had expected. Strong demand for artificial intelligence from both commercial companies and the US government underpins that success. Revenue rose by 70% year-on-year to $4.48 billion, with revenue from the US government and the commercial sector amounting to $570 million and $507 million dollars respectively, according to CNBC.

CEO Alex Karp hailed the results as “unquestionably the best” in the tech industry over the past decade. He highlighted the crucial role of AI investment for companies that want to stay competitive.

Palantir is known for its software and data tools for organisations such as the Department of Defense, the tax authority (IRS) and the Department of Homeland Security. The company has benefited significantly from the growing adoption of AI systems. Karp said the US government is embracing Palantir’s solutions, pointing to 66 percent growth in that segment.

This strong demand comes largely from the Department of Defense. Notable contracts include a $10 billion agreement with the US Army and a $448 million deal with the US Navy.

The cooperation with Immigration and Customs Enforcement (ICE) has drawn criticism. Even so, Karp defended Palantir’s role, arguing that its products actually help uphold the data protection rights enshrined in the Fourth Amendment.

Palantir’s commercial success is evident from its more than doubled US revenue compared with last year. The company has also entered into a strategic partnership with leading AI chip manufacturer Nvidia.

Net profit for the quarter climbed to more than $608 million, or 24c per share, a substantial increase from the $79 million, or 3c per share, reported in the same period a year earlier.

Palantir’s share remains popular with retail investors and has risen by around 79% over the past 12 months. Some analysts, however, have voiced concerns about its lofty valuation, which could lead to a 15% decline in 2026. Short seller Michael Burry has even publicly bet against Palantir and Nvidia. Karp condemned that move as market manipulation.

In a letter to shareholders, Karp described the profit as “pure and not contrived”, despite mounting pressure on AI companies to prioritise underlying performance. He stressed the importance of the tangible value these systems generate for long-term success.

Business AM

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