Palantir beats fourth-quarter estimates on the strength of AI and defense demand

Palantir Technologies has outperformed Wall Street's projections for the fourth quarter, fueled by escalating demand for its artificial intelligence solutions from both businesses and government entities. The company's revenue soared 70% to $1.4 billion, compared to $827.5 million in the same quarter last year. For the entire fiscal year, Palantir's sales reached $4.48 billion, with revenue contributions from government and commercial sectors amounting to $570 million and $507 million, respectively. These figures consistently surpassed analyst estimates gathered by FactSet. CEO Alex Karp expressed pride in the results, describing them as "indisputably the best results that I'm aware of in tech in the last decade" during an interview with CNBC's Morgan Brennan. He emphasized the importance of investing in AI technologies, stating, "If you're not spending it on this, you're not spending on something that is part of keeping up with momentum." Looking ahead, Palantir anticipates first-quarter revenue between $1.532 billion and $1.536 billion, exceeding FactSet's prediction of $1.32 billion. For fiscal 2026, the company has set a revenue forecast of $7.182 billion to $7.198 billion, again surpassing the expected $6.22 billion. Known for its software and data analytics tools utilized by various sectors, including the Department of Defense, the Internal Revenue Service, and the Department of Homeland Security, Palantir has experienced a surge in interest due to the increasing reliance on AI technologies and heightened enthusiasm from retail investors. Karp highlighted the significant growth in U.S. government adoption of its tools, which rose by 66%. He remarked, "America has become more lethal, more confident, more divergent from our adversaries, and, quite frankly, from our allies." Interestingly, Palantir's engagement with the U.S. government has been so robust that the company has paused new product offerings to allied nations. The demand for Palantir's products has been particularly strong from the Department of Defense, especially after securing a contract that could be worth up to $10 billion with the U.S. Army to fulfill its software and data requirements. However, the company has also faced criticism regarding its collaborations with the Department of Homeland Security, especially concerning its ties with U.S. Immigration and Customs Enforcement (ICE) following a controversial incident involving federal agents. In the commercial sector, Palantir's revenues more than doubled year-over-year, with total commercial deal value rising 145% to $4.38 billion. Additionally, the company recently announced a partnership with leading AI chipmaker Nvidia. Net income for the quarter was reported at $608 million, or 24 cents per share, a marked increase from the $79 million, or 3 cents per share, reported in the previous year. Heading into this earnings report, investor optimism surrounding Palantir was palpable, with the stock having climbed 81% over the past year. However, some analysts have raised concerns about the high valuation of the stock, which has seen a 15% decline in 2026. Notably, short seller Michael Burry has taken a position against Palantir and Nvidia, a move Karp described as "bats--- crazy" and suggested was a case of "market manipulation." In a letter to shareholders, Karp defended Palantir's profitability, calling it "pure and uncontrived" despite increasing pressure on AI firms to prioritize financial fundamentals. He also noted that the commercial sector has benefited from the growing need for software that optimizes large language models, emphasizing that only those focused on tangible value will endure in the long run.