Palantir (NASDAQ:PLTR) took a hit from two directions late last week. Software stocks sold off together, and Bloomberg reported that Democrats, who are favored to win at least one chamber of Congress in the midterms, could aim more oversight at big tech companies, Palantir among them.
The company sells software that pulls an organization’s scattered data into one place, so analysts and AI tools can act on it. Its customers are militaries and government agencies on one side and corporations on the other.
The second-quarter results were striking. Whether that’s enough depends on how much of the future the price already holds, and how secure the government half of the story really is.
Palantir’s Customers Are Spending Far More, Not Just Signing On
Start with the record. Revenue grew about 32.6% a year over the past five years, a strong run on its own. The second quarter blew past it: total revenue rose 93% to about $1.94 billion, and US commercial revenue jumped 149% to $764 million.
The customer count shows where that growth came from. US commercial customers rose 35% to 653, so revenue is growing far faster than the customer list. Companies already on board are spending much more.
Margins suggest buyers aren’t treating the product as a commodity. Gross margin ran about 84.8% over the past 12 months, and net margin about 49%. Software that sits inside how an army or a large company operates is hard to swap out, and those margins look like what that position earns. Growth paired with a durable edge is the common thread in 10 High Growth Wide Moat Stocks to Buy.
Guidance Went Up, and Analysts Have Started to Follow
Management raised its full-year outlook with the second-quarter report, guiding to about $8.15 billion in revenue, including more than $3.4 billion from US commercial customers. Third-quarter revenue is guided to about $2.16 billion, with that report due early next month.
Profitability kept pace. Adjusted operating margin was 62% in the quarter, GAAP net income was about $1.06 billion, and adjusted free cash flow reached $1.22 billion.
Wall Street has noticed. Goldman Sachs analyst Gabriela Borges upgraded the stock earlier this month, arguing the company is positioned for another phase of outperformance into 2027 and that its addressable market could step up again. Analyst interest in fast growers runs well beyond one name, as 10 Best Aggressive Growth Stocks to Buy According to Wall Street Analysts shows.
Could a Change in Washington Slow the Government Business?
The worry is specific. According to Bloomberg, a progressive think tank, Groundwork Collaborative, has shared a list of potential investigation targets with congressional staff, and Palantir is on it. If Democrats take a chamber, Bloomberg expects more hearings, subpoenas and document fights. It didn’t say Palantir has been subpoenaed.
And this isn’t a side business at risk. US government revenue rose 90% to $809 million in the second quarter, not far from the $764 million from US commercial customers. Washington’s budget and oversight choices matter across the whole group in 10 Best Aerospace and Defense Stocks to Buy According to Hedge Funds. Palantir hired lobbyists from both parties this spring, including a team led by longtime Democratic adviser Steve Elmendorf. Scrutiny isn’t the same as lost contracts, but it’s a risk no earnings report can rule out.
At 115 Times Earnings, What Is the Price Already Assuming?
You’re paying about $115 for every $1 of estimated 2026 earnings. That forward multiple sits far above the sector median of about 21, and about 8% below Palantir’s own five-year average of about 125. The stock has carried a premium for years, and it still does.
Growth is the defense. Analysts expect 2026 earnings per share to grow about 116%, which makes a triple-digit multiple easier to defend than it would be for a slower grower. The multiple rests on adjusted earnings, but the second quarter showed no gap: 41 cents per diluted share on both an adjusted and GAAP basis.
Still, a multiple this high leaves little room. Investors who want growth at a lower multiple can weigh the group in 10 Undervalued Growth Stocks to Buy Now. If growth slows, or government work comes under pressure, the premium is the first thing to give.
The Growth Is Real, the Cushion Is Thin
The evidence points to a business that has earned its premium on results but offers no margin for error. Investors who can sit through sharp swings and treat the stock as a growth bet, not a bargain, are the ones the setup suits. Two things would change the picture: US commercial growth falling well short of the pace management guided for the year, which the report due early next month will start to test, or congressional scrutiny turning into real damage to government contracts.
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This article is originally published at Insider Monkey.
