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After Stellar Earnings, Should Investors Buy, Hold, or Sell Palantir?
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Key Takeaways
PLTR delivered $1.41B Q4 revenues, up 70% year over year, capping a $4.48B year with sustained acceleration.
PLTR paired rapid growth with profits, generating $2.25B adjusted operating income and $2.3B free cash flow.
PLTR's U.S. business drove results, with 93% Q4 growth, record contract value and strong commercial momentum.
Palantir Technologies (PLTR - Free Report) delivered one of the strongest quarters in its public-market history, closing the fourth quarter of 2025 with revenue of $1.41 billion, beating the Zacks Consensus Estimate by 4.5%, representing 70% year-over-year growth and 19% sequential expansion. Full-year revenue reached $4.48 billion, up 56% from the prior year, underscoring that this acceleration was sustained rather than episodic.
Image Source: PLTR
The U.S. business was the standout. Fourth-quarter U.S. revenues climbed to $1.08 billion, a 93% year-over-year increase, while full-year U.S. revenues reached $3.32 billion, growing 75% annually. The United States now accounts for roughly three-quarters of total revenue, highlighting a decisive geographic concentration of demand.
PLTR’s Profitability Moves in Lockstep With Growth
What separated this quarter from typical high-growth software results was the level of profitability achieved alongside rapid expansion. Adjusted operating income came in at $798 million, translating to an operating margin of approximately 57%. For the full year, adjusted operating income reached $2.25 billion, maintaining a 50% margin.
Free cash flow generation was equally striking. Palantir produced $2.3 billion in adjusted free cash flow for 2025, representing an 82% year-over-year increase. These figures place Palantir in a different category from many AI-focused peers, including Snowflake (SNOW - Free Report) , which continues to prioritize reinvestment over margin expansion and C3.ai (AI - Free Report) , which is still working toward consistent profitability.
PLTR’s AI Adoption Translates Directly Into Revenues
Customer behavior further validated Palantir’s strategy. The company ended the quarter with 954 customers, a 34% year-over-year increase, while net dollar retention rose to 138%, signaling significant expansion within existing accounts.
Rather than a surge in small, experimental contracts, growth was driven by larger, more strategic deployments. Total contract value reached a quarterly record of $4.26 billion, supported by 61 deals exceeding $10 million. This contrasts with Snowflake’s more usage-based consumption model and differentiates Palantir from C3.ai’s narrower application-led deployments.
U.S. Commercial and Government Momentum Accelerates
The U.S. commercial segment continued its remarkable climb, posting 137% year-over-year growth and 28% sequential growth in the quarter. This followed already elevated growth rates in prior quarters, reinforcing that demand is compounding rather than cooling.
Image Source: PLTR
Government momentum remained robust, anchored by large defense and federal contracts, including a single U.S. Navy award valued at $448 million. These long-duration agreements add revenue visibility and stability that most pure-play commercial software providers, including Snowflake and C3.ai, lack.
Guidance Signals Confidence, Not Caution
Management’s outlook for 2026 reinforced the strength of the current trajectory. First-quarter revenue is guided to $1.53 billion at the midpoint, implying continued sequential growth. For the full year, Palantir expects revenues of roughly $7.19 billion at the midpoint, indicating 61% year-over-year growth.
Profitability is expected to remain exceptional. Adjusted operating income guidance of around $4.13 billion implies further margin expansion, while adjusted free cash flow is projected between $3.9 billion and $4.1 billion. The company also expects to maintain a Rule of 40 score near 118%, a level rarely achieved at this scale.
Risks: Geography and Expectations
The most notable constraint remains international expansion. Growth outside the United States has lagged due to procurement complexity and institutional barriers, limiting near-term diversification. Additionally, with such rapid growth and profitability already priced into the stock, expectations are elevated.
Any deceleration in U.S. commercial momentum or delays in expanding overseas could introduce volatility, especially as competition intensifies across the AI software landscape.
PLTR is a Smart Hold After Q4
Palantir’s earnings confirm that the company has entered a rare phase of enterprise software growth, with revenues expanding above 60% alongside exceptional margins and strong cash generation. Robust U.S. commercial demand, durable government contracts and rising customer expansion underpin confidence heading into 2026. However, much of this operational strength is now well reflected in the stock price. With expectations elevated and a limited margin for execution missteps, the near-term risk-reward for new investors appears less favorable. While Palantir’s execution continues to outpace peers such as Snowflake and C3.ai, fresh entries may be better timed on consolidation or broader market pullbacks. For existing investors, the results support holding the stock as long as momentum remains intact.
Image: Bigstock
After Stellar Earnings, Should Investors Buy, Hold, or Sell Palantir?
Key Takeaways
Palantir Technologies (PLTR - Free Report) delivered one of the strongest quarters in its public-market history, closing the fourth quarter of 2025 with revenue of $1.41 billion, beating the Zacks Consensus Estimate by 4.5%, representing 70% year-over-year growth and 19% sequential expansion. Full-year revenue reached $4.48 billion, up 56% from the prior year, underscoring that this acceleration was sustained rather than episodic.
The U.S. business was the standout. Fourth-quarter U.S. revenues climbed to $1.08 billion, a 93% year-over-year increase, while full-year U.S. revenues reached $3.32 billion, growing 75% annually. The United States now accounts for roughly three-quarters of total revenue, highlighting a decisive geographic concentration of demand.
PLTR’s Profitability Moves in Lockstep With Growth
What separated this quarter from typical high-growth software results was the level of profitability achieved alongside rapid expansion. Adjusted operating income came in at $798 million, translating to an operating margin of approximately 57%. For the full year, adjusted operating income reached $2.25 billion, maintaining a 50% margin.
Free cash flow generation was equally striking. Palantir produced $2.3 billion in adjusted free cash flow for 2025, representing an 82% year-over-year increase. These figures place Palantir in a different category from many AI-focused peers, including Snowflake (SNOW - Free Report) , which continues to prioritize reinvestment over margin expansion and C3.ai (AI - Free Report) , which is still working toward consistent profitability.
PLTR’s AI Adoption Translates Directly Into Revenues
Customer behavior further validated Palantir’s strategy. The company ended the quarter with 954 customers, a 34% year-over-year increase, while net dollar retention rose to 138%, signaling significant expansion within existing accounts.
Rather than a surge in small, experimental contracts, growth was driven by larger, more strategic deployments. Total contract value reached a quarterly record of $4.26 billion, supported by 61 deals exceeding $10 million. This contrasts with Snowflake’s more usage-based consumption model and differentiates Palantir from C3.ai’s narrower application-led deployments.
U.S. Commercial and Government Momentum Accelerates
The U.S. commercial segment continued its remarkable climb, posting 137% year-over-year growth and 28% sequential growth in the quarter. This followed already elevated growth rates in prior quarters, reinforcing that demand is compounding rather than cooling.
Government momentum remained robust, anchored by large defense and federal contracts, including a single U.S. Navy award valued at $448 million. These long-duration agreements add revenue visibility and stability that most pure-play commercial software providers, including Snowflake and C3.ai, lack.
Guidance Signals Confidence, Not Caution
Management’s outlook for 2026 reinforced the strength of the current trajectory. First-quarter revenue is guided to $1.53 billion at the midpoint, implying continued sequential growth. For the full year, Palantir expects revenues of roughly $7.19 billion at the midpoint, indicating 61% year-over-year growth.
Profitability is expected to remain exceptional. Adjusted operating income guidance of around $4.13 billion implies further margin expansion, while adjusted free cash flow is projected between $3.9 billion and $4.1 billion. The company also expects to maintain a Rule of 40 score near 118%, a level rarely achieved at this scale.
Risks: Geography and Expectations
The most notable constraint remains international expansion. Growth outside the United States has lagged due to procurement complexity and institutional barriers, limiting near-term diversification. Additionally, with such rapid growth and profitability already priced into the stock, expectations are elevated.
Any deceleration in U.S. commercial momentum or delays in expanding overseas could introduce volatility, especially as competition intensifies across the AI software landscape.
PLTR is a Smart Hold After Q4
Palantir’s earnings confirm that the company has entered a rare phase of enterprise software growth, with revenues expanding above 60% alongside exceptional margins and strong cash generation. Robust U.S. commercial demand, durable government contracts and rising customer expansion underpin confidence heading into 2026. However, much of this operational strength is now well reflected in the stock price. With expectations elevated and a limited margin for execution missteps, the near-term risk-reward for new investors appears less favorable. While Palantir’s execution continues to outpace peers such as Snowflake and C3.ai, fresh entries may be better timed on consolidation or broader market pullbacks. For existing investors, the results support holding the stock as long as momentum remains intact.
PLTR stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.