Companies are turning to Palantir for greater autonomy over their AI models and data, according to CEO Alex Karp
Palantir posted a second-quarter earnings beat driven by momentum in the U.S. commercial business.
Palantir's business is booming at a time when companies are closely examining their artificial-intelligence budgets. The data-analytics firm posted another quarter of record growth and an earnings beat on Monday.
For the second quarter, Palantir (PLTR) reported revenue of $1.94 billion, growing 93% from a year before and surpassing the $1.81 billion projected by analysts. Earnings per share of 41 cents also topped consensus estimates for 34 cents.
A movement toward "sovereign AI" along with the company's ongoing partnership with Nvidia (NVDA) has led to a surge in demand as customers look for full ownership over their AI models and data, Palantir CEO Alex Karp told MarketWatch.
Much of AI adoption thus far has involved migrating a company's "proprietary way of doing things, their alpha, into the lab models, and that's where the negative sentiment is in an enterprise," Karp said. Palantir is instead allowing customers to customize and run models on their own infrastructure and retain full ownership of their data.
Shares of Palantir were rising 5% in the extended session Monday. The stock has fallen 25% since the beginning of 2026, reflecting a broader sector-wide software selloff and valuation compression after Palantir shares surged over 130% in 2025.
Palantir's second-quarter growth was largely powered by the company's U.S. business, especially the commercial segment. The company closed total contract value of $3.37 billion in the quarter, up 49% from a year prior, with $2.13 billion of that coming from U.S. commercial.
U.S. revenue grew 115% year-over-year to $1.57 billion, with U.S. commercial revenue growing 149% to $764 million. U.S. revenues now comprise 81% of the overall business, up from 73% last year, Palantir CFO David Glazer told MarketWatch.
Adjusted free cash flow for the quarter was $1.22 billion, marking the first time Palantir has crossed the $1 billion mark.
For the third quarter, Palantir guided for revenue of between $2.16 and $2.164 billion, beating Wall Street expectations of $2.002 billion. Momentum in the U.S. commercial division led the company to raise its full-year guidance by nearly $500 million. Palantir now expects between $8.150 billion and $8.158 billion in revenue for 2026.
The company has taken stances on several key AI debates that have emerged recently, criticizing the trend of tokenmaxxing and advocating for the usage of open-weight models.
"Forward deployed engineers are not in the business of selling tokens," Karp said, referring to Palantir's engineers who work with customers in the field.
"Our results represent a subset of the economic value that our software has created for our customers," Karp wrote in his shareholder letter. "We do not get paid for clicks or tokens or chats. The gamification of the most significant development in modern economic history seems to us misplaced."
-Christine Ji
