Palantir Technologies Inc. (NASDAQ:PLTR) stock jumped 29.5% Tuesday, which was its second-best day ever after the company posted what CEO Alex Karp called an “otherworldly” second quarter. Revenue beat estimates, and growth happened quickly instead of slowing. Palantir raised its full-year guidance again.
Why This Beat Hit So Much Harder than Most
Revenue rose 93% to $1.94 billion, beating the $1.80 billion analysts expected. Commercial revenue jumped 149% to $764 million. Karp said the surge comes from companies demanding “AI sovereignty.” They want to keep their own data private from AI labs like OpenAI and Anthropic, rather than handing those labs the keys to their business. Citi analysts said the results “further weaken the bear case around rising AI competition.”
This makes you wonder: is Palantir proving AI sovereignty is a real, durable business worth this scale of rally?
Palantir’s Bull Case
Growth is accelerating since overall revenue rose 93%, commercial revenue rose 149%, and commercial revenue has climbed 380% since 2024 once you compound the growth. Palantir Technologies Inc. (NASDAQ:PLTR) raised its guidance for the second time this year, from an original forecast under $7.7 billion to $8.15 billion to $8.16 billion now. Remaining U.S. commercial deal value more than doubled to $6.24 billion, which means much of that future revenue is already locked in. Karp said the growth “looks like this is going to go on for at least another 18 months.” Net income hit $1.07 billion, and adjusted earnings per share came in at 41 cents, up from just 13 cents a year ago.
Palantir’s Bear Case
Even after the 30% surge, shares were still down for the year as of August 3, a sign of how far the AI-trade selloff had pushed the stock before this quarter. France’s domestic intelligence agency already dropped Palantir for a French rival. Palantir is also fighting to keep a London police contract it stands to lose. A quarter this extraordinary can still give some ground back the next day.
BigBear.ai Holdings, Inc. (NYSE:BBAI)’s Bull and Bear Case
BigBear.ai Holdings, Inc. (NYSE:BBAI) is a much smaller defense-focused AI company that posted its second-quarter results in late July. Revenue rose 13% to $36.7 million, and gross margin jumped sharply to 32.8% from 25%. It was helped by its Ask Sage generative AI platform. The company affirmed full-year guidance of $135 million to $165 million. It also won more than 20 new contracts. CEO Kevin McAleenan said BigBear.ai is “on track for our target of 17% revenue growth.”
However, adjusted EBITDA actually worsened to a loss of $11.6 million from $8.5 million a year earlier. Cantor Fitzgerald cut its price target to $4 from $5. The analyst flagged “lower EBITDA and the need for a back-half revenue acceleration to meet guidance” as key concerns. Unlike Palantir, BigBear.ai still depends heavily on a small number of federal defense contracts. The firm has also had to restate several years of past financial statements due to accounting errors.
Insider Monkey’s Hedge Fund Data
Insider Monkey’s hedge fund database shows Palantir Technologies Inc. (NASDAQ:PLTR) had 96 hedge fund holders as of Q1 2026, up from 89 the quarter before. BigBear.ai Holdings, Inc. (NYSE:BBAI) had just 22 holders, down from 27.
Among enterprise software peers, Oracle had 115 holders, ServiceNow had 108, and Snowflake had 80.
Conclusion
Palantir proved that huge companies can still grow at incredible speeds. Wall Street rewarded the firm for this performance. On the other hand, BigBear.ai is trying to do the exact same thing with artificial intelligence and government defense, even though it operates at a much smaller scale. The company is cutting costs and improving its profits, but it must do much more work before investors value it like Palantir.
Hedge funds also favor Palantir Technologies Inc. (NASDAQ:PLTR) over BigBear.ai.
While we acknowledge the risk and potential of PLTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
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