Palantir Technologies delivered its best-ever quarterly set of results because of the meteoric demand for AI tools.
Revenue stood at US$1 billion, up 48% year on year for Q2 2025. Net income came in at US$90.4 million, or US$0.04 per share, on a GAAP basis. On an adjusted basis, earnings clocked in at US$0.16 per share, beating Wall Street estimates of US$0.14.
This is the first time that Palantir has entered into revenues north of US$1 billion in any single quarter, highlighting the accelerating acceptance of Palantir among commercial entities and governments alike.
Palantir hits record quarter on soaring AI demand.
What is driving Palantir’s stellar growth?
A potential major source of revenue is the Artificial Intelligence Platform (AIP). Since its inception in 2023, this application has begun to penetrate towards new clients as well as current ones.
According to Karp, the AI market “is not hype, but a real and growing industry”. Meanwhile, U.S. commerce revenue jumped 93% year-on-year to US$306 million, while government revenue rose 53% to US$426 million.
With the addition of 64 new customers in the U.S. commercial segment, the total number of commercial clients increased by 35% to 485.
Large contracts have also been contributing. During Q2, Palantir closed 157 deals—the company says each worth at least US$1 million—with 66
How is Palantir guiding for the full year?
Palantir has reiterated its full-year 2025 revenue guidance, increasing it to a range between US$4.14 billion and US$4.15 billion, from the original guidance of US$3.89 billion to US$3.90 billion.
The adjustment to the forecast cites a strong momentum growing in the commercial as well as the government sectors. Specifically, U.S. commercial revenue is now forecasted to increase by 85% year-over-year to greater than US$1.302 billion.
For the third quarter of 2025, revenues are expected to be in the US$1.08 billion to US$1.09 billion range, reaffirming a continued upward trend.
Is the AI hype translating into profitability?
Yes. Palantir’s adjusted operating margin reached 46%, while the gross margin was 82%.
And the company posted a free cash flow of US$189 million, exhibiting great operational efficiency and financial discipline.
Palantir also recorded a Rule of 40 score of 94, well above the benchmark of 40 considered strong by software industry standards.
The balance sheet is strong, too, with US$3.9 billion in cash and no debt at the end of the quarter.
AI demand boosts Palantir’s margins to record highs.
What role do government contracts still play?
While commercial growth seems to be picking up, government contracts remain the bread and butter of Palantir’s revenues.
During Q2, the company strengthened its relationship with the U.S. Army by winning a multi-year engagement potentially worth up to US$10 billion.
It also inked a US$218 million contract with the U.S. Space Force and an enlarged US$795 million one to support Project Maven, a military AI system.
The government clients continue to count on Palantir for mission-critical data integration and real-time intelligence.
How did markets react to the Q2 results?
Investors responded positively. After the results, Palantir shares rose by more than 5% in after-hours trading etc.
Since 2025, the stock has more than doubled, a show of confidence in its AI strategy and its prospects for growth.
However, analysts remain cautious. Palantir trades with a forward revenue multiple of around 70 and a P/E ratio of over 690.
These numbers imply a premium valuation that could weigh down on the stock should its future actualities fall short of expectations.
Palantir Market Trend
Are there risks behind the record performance?
First, heavy reliance in government contracts can mean volatility should budgets turn tighter. Second, high valuation metrics also make the stock dependent on any slowdown in growth.
Third, competition in AI and enterprise software gets sharper by the day. Behind bi Eugene Moore-Rose, AI offerings from Microsoft, Google, and Oracle are scaling especially for enterprise purposes.
Lastly, investors may question whether Palantir’s AI tools will remain a long-term differentiator or just part of the broader tech cycle.
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Final thoughts
The Q2 2025 earnings of Palantir represent the highlight of the company and transform the strategic shift toward AI into a working push.
Hitting the revenue USP$1 billion quarterly revenue milestone underlines the commercial demand for real and accelerating.
However, it is an issue of sustainability in continuous execution, innovation, and pricing discipline.
With the rise in AI adoption, Palantir remains one of the most ambitious and watched companies in the space.
