Catenaa, Saturday, September 12, 2026- Palantir stock remains attractive even after it surged 50% last month as Q2 results beat estimates.
An essential point here is that, despite the recent surge, the stock has returned, as of this writing, to just under 1% in the past 52 weeks and is still down about 6% year-to-date (YTD). The upside has therefore been from oversold levels and is backed by strong fundamental developments.
On the valuation front, Palantir stock trades at a forward price-to-earnings ratio of 136.7.
Valuations look stretched, but it’s important to note that Palantir is on a high-growth trajectory, and adjusted free cash flows have been swelling.
Palantir also has a technology moat that’s reflected in the margin profile. A valuation premium is therefore justified, and if results continue to surprise, the stock is likely to break out from the current range. Having said that, gradual accumulation makes sense on the back of volatility in AI stocks.
Headquartered in Aventura, Florida, and founded in 2003, Palantir Technologies initially built software for the intelligence community in the United States to assist in counterterrorism investigations and operations. However, Palantir diversified by working with commercial enterprises that faced similar challenges with data.
As of Q2 FY26, the company had 1,049 customers, which was higher by 24% on a year-over-year (YoY) basis.
As of FY25, Palantir had a well-balanced revenue mix with 54% coming from the government segment and 46% from customers in the commercial segment.
Further, for FY25, Palantir reported 74% of revenue from customers in the United States and 26% from international markets.
Amidst robust growth, Palantir has maintained a strong balance sheet with no debt and a cash buffer of $9.2 billion as of Q2 FY26. A strong balance sheet provides flexibility for aggressive investment in R&D and expanding presence in global markets.
Backed by the positive factors of healthy top-line growth and swelling cash flows, the stock has surged in August 2026. However, over six months, the price action has been volatile, with the stock trending higher by 11%.
For Q2 FY25, Palantir reported a total RPO of $2.42 billion. This swelled to $4.9 billion as of Q2 FY26.
During the quarter, the company closed 220 deals of at least $1 million. This is indicative of the underlying business momentum.
At the same time, the company’s CEO believes that the US commercial business is “just nascent.” Assuming this holds, there is ample headroom for robust top-line growth over the coming years. The valuation premium might therefore be justified.
It’s also important to mention that the company’s “government business remains a source of extraordinary strength with momentum across both defense and civil.” With AI capabilities likely to have a significant impact on conflicts, it’s likely that the government segment will continue to boost growth.
For Q2 FY26, international commercial and government revenue increased by 26% and 42%, respectively.
While the US business is growing at a stellar pace, international revenue has been relatively sluggish. Any growth acceleration in revenue outside the US can be another catalyst for value creation.
