Written by: Rita

Palantir's Q2 revenue was $1.95 billion, a year-over-year increase of 93%, exceeding market expectations by 7%. After the earnings report was released, the stock price rose 15% in after-hours trading. The U.S. commercial business grew 150% year-over-year, further accelerating from 133% in the previous quarter. The U.S. government business grew 90% year-over-year, also faster than the 84% in the first quarter. CEO Alex Karp set a goal to maintain the current growth rate or higher for the U.S. business over the next 18 months. On August 4, Goldman Sachs raised its price target from $183 to $204, maintaining a neutral rating. Goldman Sachs believes that corporate AI deployment is shifting from a single model strategy to a multi-model combination, and Palantir retains control over data and intellectual property while helping companies integrate AI into their workflows. This trend could become a catalyst for growth in the next phase.

U.S. Commercial Accelerated to 150%, Large Contracts and Stickiness Both Rising

In Q2, the U.S. commercial business grew 150% year-over-year, higher than 133% in Q1 and 109% for the full year of 2025, also exceeding the previous guidance of "over 120%." The U.S. commercial business is accelerating.

220 transactions exceeded $1 million, 98 exceeded $5 million, and 73 exceeded $10 million. The average revenue (TTM) of the top 20 customers reached $124 million, a year-over-year increase of 67%. The total contract value was $2.1 billion, a year-over-year increase of 118%. The net revenue retention rate was 157%, indicating strong customer stickiness. The quality of revenue in the commercial business is improving, and the concentration of large customers is increasing.

The U.S. government business grew 90% year-over-year, higher than 84% in Q1. The Maven project is being adopted by more institutions, with Maven selected as the operational platform for a new project. Over 25,000 developers, military personnel, civilians, and contractors are building applications on the platform, with the ecosystem expanding.

Both the U.S. commercial and government segments are accelerating, and Palantir's growth momentum comes from multiple sources. The U.S. business constitutes a major part of overall revenue, and CEO Karp has proposed a goal for sustained acceleration over 18 months, indicating management's confidence in growth momentum.

Corporate AI Strategy Shifting to Multi-Model Combination, Sovereign AI Driving Incremental Demand

Goldman Sachs believes that Palantir's next growth phase comes from structural changes in its corporate AI strategy. Companies are simultaneously using small language models, open-source models, and cutting-edge models, flexibly switching based on different scenarios. Palantir's platform is responsible for integrating these models into a single workflow.

The core demand of this trend is to run AI within existing workflows while maintaining control over data, logic, and intellectual property. Palantir's platform precisely meets this demand.

The concept of sovereign AI is also spreading. Enterprises and government agencies are increasingly focused on data sovereignty issues in AI deployments, and Palantir allows customers to flexibly migrate and deploy in different environments, placing it in a strong position within the growing demand for sovereign AI. Sovereign AI addresses the pain points of corporate AI deployment, making it an incremental demand. Large enterprises are reluctant to hand over core business data to third-party model vendors and do not want to be locked into a single model. They need a platform that can deploy AI across models and environments, and Palantir provides a unified platform for such companies. This forms its competitive moat in the AI application layer.

Regarding the competitive landscape, Palantir's management emphasizes that the solutions themselves are designed to be portable, offering flexibility to customers. Companies need to continue creating value and innovating to win business, and cannot rely on lock-in effects. Goldman Sachs points out that the competitive environment is intensifying, but Palantir's differentiation lies in maintaining customer relationships through continuous value delivery, rather than attempting to lock customers in.

Stock Price Rises 15% After Earnings Report, Goldman Sachs Raises Price Target to $204

Palantir's stock price rose 15% in after-hours trading following the earnings report. Goldman Sachs raised the 12-month price target from $183 to $204, based on a 60 times forward free cash flow valuation multiple. The current stock price is $125.65, with an implied upside of about 62% to the target price. A multiple of 60 may seem expensive, but it has been adjusted down from a previous 65. The main reason for Goldman Sachs to lower the multiple is the downward shift in peer valuation centers, not the deterioration of Palantir's fundamentals. A 60 times FCF multiple is a reasonable premium for a company with close to double revenue growth and a net revenue retention rate of 157%.

At the same time, revenue forecasts for 2026 to 2028 have been raised, with 2026 increased from $7.96 billion to $8.37 billion, 2027 increased from $11.59 billion to $12.87 billion, and 2028 increased from $14.85 billion to $16.82 billion.

Goldman Sachs maintains a neutral rating, mainly concerned that the growth rate of the commercial business may slow down during macroeconomic downturns and that the competitive environment is intensifying. Upside risks include continued acceleration of government business and greater than expected expansion of the commercial sales team.

Palantir's earnings data is strong. The Q2 results exceeded expectations, providing short-term validation, while the narrative around sovereign AI offers medium to long-term imagination space. Whether the stock price can continue to rise depends on the pace at which the shift in corporate AI strategy is realized.

The information in this article is a整理与解读 of third-party brokerage research reports (Goldman Sachs, August 4, 2026) by Chaoxiang Research, combined with整理 of public market information. The ratings, price targets, earnings forecasts, and related judgments quoted in the article are the opinions of the brokerage analysts and only represent the position of their respective institutions, not the views of Chaoxiang Research, and do not constitute any investment advice. The market is risky, and decisions should be made independently. This article should not be used as the basis for buying or selling any securities.