A month has gone by since the last earnings report for Palantir Technologies Inc. (PLTR Quick QuotePLTR - Free Report) . Shares have added about 10.6% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Palantir Technologies due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important catalysts.

PLTR Beats Q2 Earnings Estimates

Palantir Technologies delivered another exceptional quarter, with second-quarter 2026 results comfortably surpassing Wall Street expectations.

Revenues reached $1.94 billion, increasing 92.8% year over year and 19% sequentially, while beating the Zacks Consensus Estimate of $1.81 billion by 7.2%.

Earnings per share came in at 41 cents, up from 16 cents a year ago, representing 156.3% year-over-year growth, while rising from the previous quarter's 34 cents (20.6% sequential growth). EPS also exceeded the consensus estimate of 35 cents by 17.1%.

Commercial Business Remains PLTR’s Primary Growth Engine

Commercial revenue climbed to $945 million, increasing 109.7% year over year and accounting for nearly 49% of total quarterly revenue. Government revenue reached $990 million, rising 79% from the prior-year quarter and representing about 51% of total sales.

The company's U.S. operations remained the biggest contributor to growth. U.S. revenues totaled $1.57 billion, representing more than 81% of company-wide revenue, reflecting exceptionally strong customer demand for enterprise AI deployments.

Large contract activity remained particularly robust. During the quarter, the company closed 220 deals worth at least $1 million, reflecting increasing adoption of its Artificial Intelligence Platform across commercial enterprises and government agencies.

Margins and Cash Flow Highlight PLTR’s Operational Strength

The company's rapid revenue expansion was accompanied by outstanding profitability. Adjusted gross margin remained exceptionally high at 86%, highlighting the scalability of Palantir's software platform. Adjusted operating margin expanded to 62%, among the highest across enterprise software companies.

Cash generation remained equally impressive. Cash from operations totaled $1.216 billion, while adjusted free cash flow reached approximately $1.22 billion during the quarter. These figures translate into an adjusted free cash flow margin of roughly 63%, illustrating Palantir's ability to convert revenue growth into substantial cash generation.

The company ended the quarter with $9.2 billion in cash, cash equivalents, and short-term U.S. Treasury securities, providing considerable financial flexibility to fund product development and future expansion initiatives.

While management acknowledged that gross margin experienced modest pressure from assuming cloud-hosting responsibilities for a government customer, executives indicated that the move should improve implementation speed and strengthen long-term customer relationships.

Bookings Show Demand Remains Exceptionally Strong

Beyond reported revenue, forward-looking indicators also strengthened. Total contract value bookings reached $3.4 billion, reflecting another record quarter for customer commitments.

Net dollar retention stood at 157%, demonstrating that existing customers continue expanding their usage significantly after initial deployments.

Total remaining deal value increased to $13.1 billion, while remaining performance obligations reached $4.9 billion, providing strong visibility into future revenue growth.

These metrics suggest that Palantir's current momentum is not solely driven by recent contract wins but is increasingly supported by long-term customer expansion.

AI Platform Expands PLTR’s Competitive Position

Palantir's product strategy increasingly revolves around enabling enterprises to deploy AI models while maintaining full ownership over their data, workflows and operational knowledge.

Management emphasized that customers increasingly prioritize flexibility, allowing organizations to benchmark different AI models and replace them whenever necessary without becoming dependent on a single provider.

This positioning appears to resonate strongly with enterprises seeking greater control over rapidly evolving AI technologies. Rather than competing directly on foundation models, Palantir continues focusing on the software layer that integrates, manages and operationalizes AI across organizations.

Management also highlighted growing demand from customers that initially adopted Foundry but are now expanding toward broader AI deployments across multiple business functions.

Management Raises Guidance Again

Perhaps the most significant takeaway from the quarter was management's increased confidence in future growth. For the third quarter of 2026, Palantir expects revenues between $2.16 billion and $2.164 billion, implying another sequential increase of roughly 12% from the second quarter. Adjusted income from operations is projected between $1.292 billion and $1.296 billion.

Management also substantially increased full-year guidance. Revenues are now expected between $8.15 billion and $8.158 billion, up from the previous outlook of $7.65$7.662 billion. The midpoint of the guidance therefore increased by nearly $500 million, representing one of the company's largest upward revisions. The company also lifted its U.S. commercial revenue forecast to more than $3.424 billion compared with the earlier expectation exceeding $3.224 billion.

Adjusted operating income guidance increased to $4.889-$4.897 billion, while adjusted free cash flow guidance rose to $4.5-$4.7 billion, reinforcing management's confidence that profitability will continue improving alongside revenue growth.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

The consensus estimate has shifted 10.74% due to these changes.

VGM Scores

Currently, Palantir Technologies has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. Following the exact same course, the stock was allocated a score of F on the value side, putting it in the fifth quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Palantir Technologies has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Palantir Technologies belongs to the Zacks Internet - Software industry. Another stock from the same industry, Automatic Data Processing (ADP Quick QuoteADP - Free Report) , has gained 4.8% over the past month. More than a month has passed since the company reported results for the quarter ended June 2026.

ADP reported revenues of $5.47 billion in the last reported quarter, representing a year-over-year change of +6.8%. EPS of $2.64 for the same period compares with $2.26 a year ago.

For the current quarter, ADP is expected to post earnings of $2.78 per share, indicating a change of +11.7% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.

ADP has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.