Palantir Pops after a Solid Quarter – but the Stock’s Still Down this Year

CNBC, Bloomberg, and Fortune contributed to this report.

Palantir jumped about 7% on Tuesday after the data-software company beat Wall Street’s Q4 estimates, showing investors there’s still steam behind its AI play with governments and businesses.

The numbers: revenue came in at $1.41 billion versus the $1.33 billion analysts expected, and adjusted EPS was $0.25, topping the $0.23 forecast. CEO Alex Karp hyped the results on TV, calling them “the best results that I’m aware of in tech in the last decade,” and Wall Street cheered – at least for a day.

Palantir’s growth is being driven in large part by government adoption of its AI and data tools – Karp said US government revenue jumped 66% year-over-year. Big-ticket wins include a software deal with the US Army worth up to $10 billion and a roughly $448 million contract with the Navy. That defense business is a major part of the bull case, though some of the company’s government work, like projects with ICE, has attracted public scrutiny.

Analysts aren’t blind to the risks. Louie DiPalma at William Blair said the stock’s valuation still looks “frothy” compared with private AI rounds, but he sees upside as Palantir grows its higher-margin government footprint – forecasting operating margins could climb from about 50% to 65% over the next five years.

A little context: Palantir exploded in 2025, rallying roughly 135% for the year, but the stock has cooled off – at Monday’s close it was down about 17% year-to-date. Tuesday’s pop eases the pain, but the longer question remains whether recurring government deals and an expanding commercial push can keep the momentum going.