Palantir Technologies(NASDAQ: PLTR) he crushed S&P 500 each of the last three years. This started in 2023 when the growth stock generated a return of over 167%, then continued in 2024 with an amazing 340% gain. Its momentum did not wane in 2025 as the stock doubled again, advancing 135%.
Meanwhile, City Group analyst Tyler Radke sees the good times continuing to roll in 2026. He recently upgraded the stock to a buy and set a $235 price target.
The analyst said discussions with CIOs (chief information officers) lead him to believe that Palantir’s commercial revenue will only continue to accelerate as budgets and use cases grow, while government revenue may be about to take off as the US government sees modernization as a top priority. Radke believes this will cause the company to continue to beat analysts’ revenue and earnings estimates and for them to continue to be revised significantly higher.
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Palantir stock’s strong performance can be directly linked to its accelerating revenue growth, which has improved every quarter since the second quarter of 2023. In that span, its year-over-year quarterly revenue growth went from just 13% in 2023 to 63% last quarter.
The biggest driver of Palantir’s success has been commercial customers in the US, which coincides with the introduction of its artificial intelligence platform (AIP). The company began primarily as a government defense contractor, whose Gotham platform was able to gather and analyze data from a large collection of sources and help uncover potential threats. He later brought his data collection and analytics expertise to the commercial sector with his Foundry solution, but it wasn’t until he paired it with AIP to act as an orchestration layer that it really took off.
One of the biggest problems with artificial intelligence (AI) is that it can hallucinate and just make things up. However, having a single source of truth for data can greatly alleviate this problem and make AI more useful in real-world settings.
Foundry AIP can gather data from a variety of sources and organize it into an ontology that links the data to its real-world counterparts, be it a physical object or a process. With this clean and organized data, customers can use the large linguistic model (LLM) of their choice to provide actionable insights based on their data to help solve problems without the worry of AI hallucinations.
As the orchestration layer needed to deploy AI solutions, Foundry AIP has become a hit in the US commercial space. Last quarter, Palantir’s US commercial revenue grew 121% to $397 million, with growth coming from both new and existing customers. The company’s Bootcamp sales model, where it would help organizations build AI-powered tools based on their data in just five days, shortened its sales cycle and quickly attracted new customers.
This can be seen in the 45% increase in the number of customers registered by Palantir in the last quarter. Meanwhile, existing customers are also expanding rapidly as they continue to find new use cases. In Q3, the company’s total US commercial contract value soared 342%, while its net revenue retention was 134%.
The company has also seen strong growth with its biggest customer, the US government, as the Trump administration continues its modernization efforts for defense and intelligence agencies. Last quarter, US government revenue rose 52% to $486 million. It also saw strong growth in international government revenue, with revenue up 66% to $147 million.
AIP’s position as an AI operating system and the breadth of use cases it can be applied to have made Palantir a big AI winner in the long run. However, with the stock trading at a forward price-to-sales multiple of 49 times and a forward price-to-earnings ratio of 126 times, the stock is expensive. If growth can continue to accelerate, it could rise into those multiples, but I’d rather be a pullback buyer.
The world’s largest companies — Nvidia, Alphabetand Apple — all have seen big draws throughout their history. So even if Palantir will eventually become one of the biggest companies in the world, the path likely won’t be straight. As such, I would look for a dip in the stock before taking the plunge.
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Citigroup is an advertising partner of Motley Fool Money. Geoffrey Seiler has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Apple, Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.
This growth stock continues to crush the market was originally published by The Motley Fool
