Is Palantir a Buy as Its Revenue Surges 93% and Continues to Accelerate?

Palantir Technologies (NASDAQ: PLTR) once again delivered impressive results, sending its shares soaring higher. Despite the surge in its stock price, the stock is still down 8.6% so far in 2026.

Let's dive into Palantir's second-quarter results and prospects to see why I think it could be one of the biggest winning artificial intelligence (AI) stocks over the next decade.

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Palantir managed another incredible quarter

For the 12th straight quarter, Palantir's quarterly revenue growth accelerated. Over the past three years, its year-over-year revenue growth has gone from 13% in Q2 2023 to 93% in Q2 2026.

Its Q2 revenue of $1.935 billion also handily topped management's prior forecast for revenue of between $1.797 billion and $1.801 billion. Adjusted earnings per share, meanwhile, surged from $0.16 to $0.41.

Data source: Palantir. All figures represent year-over-year growth.

U.S. commercial revenue once again led the charge, powered by brisk customer adoption and expansion of its Artificial Intelligence Platform (AIP). U.S. commercial revenue soared 149% to $764 million in the quarter, while U.S. commercial remaining deal value jumped 124% to $6.24 billion. Meanwhile, it closed U.S. commercial deals worth $2.13 billion in total contract value in the quarter, a 49% year-over-year increase.

One of the most impressive metrics from Palantir's report was once again its net revenue retention, which measures revenue growth from existing customers that have been with the company for more than a year. This ballooned to 157% from 150% in Q1, demonstrating how quickly existing customers are expanding their spending with Palantir. This metric is also a testament to how valuable its customers find its solution.

Palantir also continues to add new customers, with its U.S. commercial customer count jumping by 35% year over year and 6% sequentially. Its overall customer count increased by 24% year over year and 4% sequentially.

On the government side of its business, revenue climbed 79% year over year to $990 million. U.S. government revenue surged 90% to $809 million. International government revenue, meanwhile, rose by 42% to $181 million. Its international commercial segment has not been a high priority, but its revenue grew by 26% to $182 million.

Looking ahead, Palantir projected Q3 revenue of between $2.16 billion and $2.164 billion, representing 83% growth at the midpoint. Note that last quarter it projected 79% revenue growth and then delivered 93% growth.

For the full year, it upped its revenue guidance to a range of $8.150 billion to $8.158 billion, representing 80% growth. That's up from prior guidance calling for revenue between $7.65 billion and $7.662 billion, and up from its original revenue forecast of between $7.182 billion and $7.198 billion.

It expects U.S. commercial revenue to rise by at least 134%, up from its prior guidance of at least 120% growth and its original outlook of at least 115%.

A big valuation, but big potential

The big knock on Palantir, as it has been for most of the past few years, is its valuation. After its price surge, the stock trades at a forward price-to-sales (P/S) ratio of 32.5 times 2027 analyst estimates and a forward P/E of 73 times. That's pricey, but if it can continue its current pace of growth over the next few years, it may not be as frothy as it appears.

It's also notable that Palantir's expenses are very lean for its revenue growth, so its revenue is translating into profits much more robustly than most fast-growing software-as-a-service (SaaS) companies have seen in the past. This should also support a higher multiple and give it leverage to continue its robust pace of growth. For example, it could eventually expand its sales and marketing in Europe and Asia and pursue the international commercial market more aggressively.

Palantir is demonstrating that its AIP product is vital in helping organizations harness the power of AI. As it takes control of the operating layer, this is a company I still believe could become one of the largest in the world over the next decade, which is why the stock is still a buy despite its valuation.

Geoffrey Seiler has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.