Shares of Palantir Technologies surged 6.9% in early trading on Tuesday as investors piled into the stock following a strong quarterly sales report, fueled by accelerating U.S. defense spending and demand for the company’s military-grade artificial intelligence platforms.
At current prices around $158, the Denver-based firm is set to add roughly $24.4 billion to its market capitalization if gains hold. Palantir’s stock has risen an extraordinary 1,700% over the past three years.
The company, co-founded by tech billionaire Peter Thiel and backed early on by the Central Intelligence Agency, reported on Monday that revenue from U.S. government clients jumped 66% in the fourth quarter to $570 million. That surge helped lift total quarterly revenue to $1.41 billion, comfortably above analysts’ expectations of $1.33 billion.
Looking ahead, Palantir issued a first-quarter revenue forecast that exceeded market estimates and highlighted expectations for a sharp acceleration in sales growth in 2026, driven largely by expanded government contracts.
Analysts at Morningstar said that rising political momentum behind reindustrialization and stronger U.S. supply chains is creating a favorable environment for new deployments of Palantir’s efficiency-focused software.
Despite Tuesday’s rally, Palantir shares remain down nearly 17% year-to-date, as some investors remain cautious about valuation. The stock currently trades at a forward price-to-earnings ratio of around 131.
Analysts at Jefferies warned that the company will need to sustain its rapid growth to justify its premium pricing, particularly as year-over-year comparisons become more demanding.
CEO defends surveillance technology
Chief Executive Alex Karp also addressed criticism surrounding Palantir’s surveillance tools, stressing that the company has safeguards in place to prevent misuse and government overreach.
Karp said Palantir is “supporting in a critical manner some of the most complex and sensitive operations” undertaken by the U.S. government, though he declined to specify the programs involved.
His comments come amid growing political, public, and investor scrutiny of companies working with U.S. Immigration and Customs Enforcement, following backlash over the agency’s enforcement tactics earlier this year.
Several firms have recently moved to distance themselves from ICE-related contracts due to reputational and governance concerns. Among them is Capgemini, which announced plans to sell its U.S. government services unit after facing criticism over an ICE surveillance agreement.
Last year, Palantir secured a major contract with ICE to develop surveillance software for immigration enforcement. As of June 3, it stood as the company’s largest single award from the agency among 46 federal contracts received since 2011.
