Palantir Earnings: Strong Growth, Valuation Debate
Palantir earnings showed rapid revenue growth and outsized margins while shares slid after a bearish note, sharpening trader focus on valuation.
KEY TAKEAWAYS
- Palantir reported Q4 revenue of $1.4 billion, 70% year-over-year.
- Adjusted operating income was $798 million, implying a 57% adjusted operating margin.
- Shares fell roughly 30% after a high-profile bearish note, fueling a valuation debate.
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Palantir Technologies reported earnings on Feb. 13, 2026, showing rapid revenue growth and high margins that supported aggressive full-year guidance, even as shares declined following a bearish note and renewed scrutiny of the company’s valuation.
Q4 Results and Full-Year Guidance
In the fourth quarter of 2025, Palantir reported revenue of $1.4 billion, a 70% increase year-over-year, with adjusted operating income of $798 million, reflecting a 57% margin. The quarter produced a Rule of 40 score of 127%, a metric combining revenue growth and profitability. U.S. commercial revenue surged 137% to $507 million, while U.S. government sales rose 66% to $570 million. Total customers increased 34% to 954. Total contract value bookings reached a record $4.3 billion, up 138%, and net dollar retention stood at 139%.
For the full year 2025, revenue rose 56% to $4.5 billion. Adjusted operating income and adjusted free cash flow each totaled $2.3 billion, with margins near 50%. U.S. commercial revenue more than doubled, reaching $1.5 billion, a 109% increase.
Palantir set aggressive targets for 2026, guiding to about $7.2 billion in revenue, a 61% increase at the midpoint. Adjusted operating income is expected near $4.1 billion, with adjusted free cash flow around $4.0 billion. The company projects a Rule of 40 score of 118% for the year. Management also forecast U.S. commercial revenue exceeding $3.1 billion, at least 115% growth, and first-quarter revenue near $1.5 billion with adjusted operating income around $870 million.
Market Reaction and Valuation Debate
Shares fell roughly 30% in recent trading, coinciding with a bearish note from Michael Burry projecting a 66% downside to about $46 per share. The stock closed Feb. 12, 2026, at $129.13, down 4.8% on volume of 73.4 million shares.
This decline intensified debate over Palantir’s valuation. The consensus price target cited was near $190, while trailing and forward price-to-earnings ratios stood around 205 and 109, respectively. Morningstar’s fair-value estimate placed the stock at $150 with a three-star rating. Some analysts dismissed the bearish note as lacking new evidence. Investors noted insider selling without offsetting purchases as a cautionary signal.
The contrast between Palantir’s strong revenue growth, record contract bookings, and large cash-flow margins on one side and stretched valuation multiples on the other frames the market’s question: whether the company’s 2026 scale-up and commercial expansion will justify current expectations.
