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Palantir, an AI-powered Software-as-a-Service (SaaS) provider that helps companies and government agencies analyze vast amounts of raw data, recently achieved a rare financial milestone: a 48% year-over-year growth in revenue paired with an operating margin of 46%.
Palantir has two specialized platforms: Gotham for the data analytics needs of various government agencies, and Foundry for enterprises. The company has also developed its bespoke Artificial Intelligence Platform (AIP), which integrates various LLMs and other generative AI within an organization’s operational structure via AI-powered applications and agents.
On Monday, Palantir released its [Q2 2025 earnings](https://investors.palantir.com/news-details/2025/Palantir-Reports-Q2-2025-U-S–Comm-Revenue-Growth-of-93-YY-and-Revenue-Growth-of-48-YY-Guides-Q3-Revenue-to-50-YY-Raises-FY-2025-Revenue-Guidance-to-45-YY-and-U-S–Comm-Revenue-Guidance-to-85-YY-Crushing-Consensus-Expectations/), surpassing expectations in nearly every metric. The company reported $1.004 billion in revenue, well above the consensus estimate of $939.71 million. This was driven by 157 deal closures of at least $1 million, 66 of at least $5 million, and 42 of at least $10 million, pushing its closed total contract value (TCV) to a record-setting $2.27 billion, up 140% year-over-year.
Palantir’s guidance for the third quarter was equally impressive, projecting revenue between $1.083 billion and $1.087 billion, with full-year revenue now forecasted at $4.142 – $4.152 billion and free cash flow projected between $1.8 billion and $2.0 billion.
Morgan Stanley analyst Sanjit Singh has raised his price target on Palantir shares from $98 to $155, while maintaining an ‘Equal Weight’ rating. Palantir shares are currently trading at around $169 in early pre-market trading.
Singh praises Palantir’s success: “Palantir has the winning recipe to deploy AI. Wow… is our reaction to Q2 results with nearly every headline metric and key performance indicator accelerating versus Q1, which itself was a very strong quarter.”
To contextualize Palantir’s growth, Singh points out eight consecutive quarters of “accelerating year-over-year (YoY) growth” and an “astounding” Rule of 40 score of 94%, composed of a 48% YoY revenue growth and a 46% operating margin. The company’s run-rate has just eclipsed $4 billion.
The Rule of 40 posits that a company is healthy if its growth rate plus profit margin equals or exceeds 40%. Palantir’s four core strengths are:
1. Software-defined data integration/ingestion.
2. Creating an ontology for AI models to understand the underlying relationships between data, transactions, employees, and customers.
3. Workflow automation and grounding state-of-the-art models in enterprise data using the AIP platform.
4. Bringing highly technical engineers to help get complex use cases into production environments.
Palantir’s sole concern is its sky-high valuation, now approaching nose-bleed levels with a P/E ratio of 1285.58.
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