Spiking nearly +7% in Tuesday’s trading session, Palantir Technologies (PLTR – Free Report) stock made headlines after delivering a blowout Q4 report yesterday evening.
Providing advanced software platforms that help governments and businesses integrate huge amounts of data, analyze it, and make high-stakes decisions, Palantir’s tools are enhanced by its underlying AI platform (AIP) and are widely used in defense, intelligence, healthcare, and finance operations as a response to complex real-world problems.
Correlating with such, Palantir issued eye-catching guidance that accompanied record Q4 results, fueled by AI adoption, massive U.S government contracts, and expanding commercial traction.
Since going public in 2020, Palantir’s stock is now up a spectacular +1,600% after rising another +50% over the last year. That said, following the post-earnings rally, PLTR is still trading nearly 25% from its all-time high of $207 a share, which it hit in November.
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Palantir’s Q4 highlights
Palantir posted a quarterly sales peak of $1.4 billion, its third straight quarter of a billion or more in sales. This was a 70% increase from Q4 2024 sales of $827.52 million and impressively topped estimates of $1.34 billion by 4%. Notably, U.S. revenue spiked 93% to $1.07 billion, fueled by a 137% surge in U.S. commercial revenue at $507 million.
Even better, Palantir moved further past the profitability line with net income coming in at $608 million or adjusted EPS of $0.25, compared to $79 million in the comparative quarter or $0.14 per share. Topping Q4 EPS estimates of $0.23, it’s also noteworthy that Palantir hit a peak in adjusted free cash flow of $791 million on a 56% margin.
What also helped in refueling investor sentiment is that Palantir has now reached or exceeded EPS expectations for 13 consecutive quarters, posting an average earnings surprise of 11.63% in its last four quarterly reports.
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Full-year results and positive guidance
Rounding out fiscal 2025, Palantir’s top line stretched 56% year over year to $4.48 billion, with full-year adjusted EPS climbing to $0.75 from $0.08 in 2024.
Furthermore, Palantir issued strong forward guidance, expecting Q1 sales in a range of $1.53-$1.54 billion, while forecasting full-year FY26 sales to increase to $7.18-$7.2 billion. Both targets crushed Wall Street’s forecast of $1.31 billion and $6.23 billion, respectively.
The context behind Palantir’s strong outlook is based on its massive growth in U.S. commercial revenue, surging adoption of AIP, and record total contract value (TCV) bookings of $4.3 billion, which was up 138% YoY.
Monitoring Palantir’s Valuation
Of course, the obvious objection to Palantir being one of the best tech stocks to consider this year is that PLTR is trading at 142X forward earnings and 56X forward sales.
These are very stretched valuations, even as it relates to other high-growth tech stocks that have AI-driven catalysts with Nvidia (NVDA – Free Report) , for example, trading at 25X forward earnings and 24X forward sales.
Palantir’s Zacks Internet-Software Industry’s forward-looking P/E and P/S multiple averages are at 31X and 5X, respectively.
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Bottom line
Palantir stock currently lands a Zacks Rank #3 (Hold), which obviously suggests some hesitation in regard to PLTR being a top tech pick for 2026.
However, Palantir’s record-setting acceleration and aggressive guidance are helping to justify the premium investors are paying for PLTR. Most importantly, this indicates that the AI software leader may eventually grow into its lofty valuation, but a buy rating will likely depend on a significant uptick in both FY26 and FY27 EPS revisions.
Source: https://www.fxstreet.com/news/is-palantir-a-top-tech-pick-for-2026-after-strong-q4-results-and-guidance-202602040724
