Why Palantir Technologies Stock Charged Higher Today

Palantir Technologies (NASDAQ: PLTR) stock hit the ground running Tuesday, climbing as much as 11.7%. As of 10:55 a.m. ET, the stock was still up 6.8%.

The catalyst that sent the artificial intelligence (AI) software and data mining specialist higher was its quarterly financial report, which helped quell concerns about an AI slowdown.

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It just keeps getting better

Just when investors believe that Palantir's results couldn't possibly get any better, the company pulls another rabbit out of its hat.

For the fourth quarter, Palantir generated record revenue of $1.4 billion, an increase of 70% year over year and 19% quarter over quarter. This marked the 10th successive quarter of accelerating growth. This drove adjusted earnings per share (EPS) of $0.25. Analysts' consensus estimates called for revenue of $1.34 billion and EPS of $0.23, so the results exceeded Wall Street's already lofty expectations.

The company's Artificial Intelligence Platform (AIP) continued to drive Palantir's growth. While U.S. government revenue climbed 66% to $570 million, U.S. commercial revenue -- which includes AIP -- soared 137% to $507 million. If that growth rated continues, U.S. commercial revenue will soon overtake government contracts as the company's biggest growth driver.

Beyond the accelerating revenue growth, one of the more telling trends is Palantir's expanding margins. The company's gross profit margin climbed to 84.6%, up from 78.9% in the prior-year quarter, while its net profit margin rose to 43.4%, up from 9.2%. This helps dismiss any concerns regarding Palantir's ability to effectively scale its operations.

Management issued preliminary guidance for 2026, catching investors off guard, forecasting full-year revenue of $7.19 billion, representing 61% growth at the midpoint of its guidance -- nearly $1 billion above analysts' consensus estimates.

In the wake of its stunning performance, Wall Street scrambled to update its models, delivering numerous upgrades and price target increases.

To be clear, the stock is still wildly expensive, trading for 366 times earnings and 111 times next year's expected earnings. That said, if Palantir continues to grow at its current rate, today's valuation could turn out to be a bargain.

Danny Vena, CPA has positions in Palantir Technologies. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.