Palantir Technologies: I Was Wrong About Palantir, And So Were You
Equity research follow-up coverage, rating upgrade
For three quarters in a row now, Palantir has posted what I believe to be the best SaaS earnings the stock market has seen. For four quarters in a row now, Palantir has posted what I believe to be the best SaaS earnings the stock market has seen.
The intrinsic value growth that this business has been exhibiting over the past twelve months is nothing short of extraordinary. Not only because Palantir keeps accelerating its pace of growth and expanding its margins, but because of how durable the growth is. This is not short-term; this business will accelerate for a long time into the future.
For the observant investors, the interest in Palantir is skyrocketing, and it’s not only sourced from Palantir’s own commentary. CEO Alex Karp and other executives have been saying that the volume of inbound they are receiving is more than they can keep up with for several quarters now, and that was reiterated once again.
To double-check the interest, I ran a screen on the word “Palantir” across all publicly traded companies in the U.S., and the results surprised me. There are 647 separate instances of Palantir being mentioned across different companies’ investor relations. The customer testimonials are exactly what Palantir has been saying; they are changing the unit economics of businesses at scale, and as Palantir’s numbers also suggest, the customers can’t get enough of Palantir.
On Palantir, our partnership continues to deepen. I am convinced this relationship remains underappreciated by the market. Their Foundry operating system is empowering completely new ways of work.
From improving efficiencies in our manufacturing, logistics, planning, procurement to the automation of workflows throughout the company, we continue to believe that the upside to this body of work is well beyond anything approaching historical normality from traditional system upgrade efforts.
Scott Ford, Chief Executive Officer
Westrock Coffee Company, Q1 2026 Earnings Conference Call
The reason I highlight this particular customer is that the CEO was an AI skeptic. He does not follow hype on social media or delve into AI thoroughly. He thought that AI was a mere chatbot, with no tangible benefits to his business.
I realize that what I read and what we see talked about in the AI world and what Palantir’s operating system actually is, I can barely recognize the reality of what they’re doing on the ground with the talk that goes on around AI.
[…]you’re talking to a guy who’s not on social media, doesn’t know anything about it, doesn’t care to know anything about it. I was full grown when that came out. I skipped all of that. I thought AI and the chatbot and having conversations with an AI system was of the same ilk.
What I see, though, is the reality that Palantir creates a walled garden, if you will, where every piece of data in our network across all the systems and all of the handoffs and all of the spreadsheets and all of the memos and the hundreds of hours a week that we spend as individuals trying to explain and connect information from one system to another to another to then even be able to guess what our profitability is, let alone audit it.
Palantir’s Foundry system contains all of that information and drains the need for all of those systems and all of that activity. We’re talking tens of millions of dollars of benefit over the next three to five years annually in a business our size at only a $1.3 billion run rate.
Company profile
9 May, 2026 Follow-up coverage
Direction: Buy
Previous fair intrinsic value: $204.45, as of February 5, 2026
Symbol: PLTR, Exchange: NASDAQ
Sector: Technology, Industry: Software - Infrastructure
Theme: AI Software
Fair intrinsic value: $268.5 (94.85%), as of May 9, 2026
Market capitalization: $354 273 million
Pricing data: P/S 80x, P/E 220x
Previous coverage:
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Growth is exceeding everyone’s expectations
Palantir has once again exceeded Wall Street’s expectations, my own expectations, and their own guidance in terms of topline growth. Q1 2026 saw 85% Y/Y revenue growth, but as always with Palantir, the mere number is not the impressive part; it’s the composition of the number that tells the whole narrative.
Figure 1: Segmented revenue
When a company is exhibiting accelerating growth to an extent that it becomes exponential in nature, the natural question is to ask “how long can this be sustained?” That is why I find it important to understand the pillars supporting the growth that the company is experiencing, which also allows investors to understand the scalability of the business. Looking at where the growth came from on a cohort basis, 50% of the overall growth came from existing customers, and 35% came from new customers. That means, even if Palantir saw no new customers in the past year, they still would have grown 50% in Q1 2026 purely through their existing customer base from a year ago.
Figure 2: Existing customer and new customer cohort growth
The accelerating trend in how much existing customers are spending on Palantir software is truly a marvel to behold, but it does not end there. Palnow now has over 1000 customers, and 2% of those (top 20) account for 41% of overall revenues. Over the trailing twelve months, the top 20 customers average $108 million in revenue per customer, while the average customer outside of the top 20 averages $3.1 million. The top 20 customers’ average spend is 3500% higher than the average of customers outside the top 20.
What’s astonishing is that these massive companies that are already spending huge amounts on Palantir software are actually growing their spending faster than the overall average of existing customers. The companies that already utilize Palantir on a large scale are still extracting so much value from Palantir that they find it necessary to increase their spending at an increasingly accelerating pace.
Figure 3: Top 20 customer cohort revenue growth (TTM), and percent of total revenue (TTM)
Those 3 charts are really all you need to tell the narrative of how Palantir is the only company in the enterprise software world that is actually delivering real, tangible value from its AI platform to its customers. The customers, who are already spending millions of dollars annually on Palantir software, are rapidly accelerating their pace of spending because they see how much value they are extracting from utilizing Palantir. In addition, the ones who are spending the most are the ones who want to also increase their spending the most.
While contract configuration seems to vary, we know from historical research that AIP has usage-based pricing. Meaning, implementing AIP to solve only a single use case may not yield a large increase in contract value, but those expanding AIP to power most of their business could yield a contract value increase of 2-3x, without a real ceiling. The more you employ Palantir, the more value you extract from it, and the more you want to keep implementing it. The reason Palantir can charge over $100 million annually for its software is that it generates more than $100 for the customers who are using it; meaning, if Palantir can save your business a hypothetical $100 billion in annual spending, you wouldn’t mind paying $50 billion per year for that software.
The scalable nature of the software is a core part of the sustainability of Palantir’s growth, but the more you dig, the more convincing it becomes. Existing customer cohorts and their accelerated growth are impressive, but there are many more financial results that point toward the sustainability and even acceleration of the growth that Palantir is seeing, for a long time into the future.
One of the more shocking comments from Palantir’s Q1 earnings call was Alex Karp mentioning that he will drive the company to double U.S. revenue in 2026 and also extend that to 2027. Two years of consecutive 100% growth in U.S. revenue, which is ~80% of total revenue, raises the intrinsic value of the business massively.
We are at our limit doing 100% this year, which I am going to drive the company to, and maybe we can do 100% next year in the U.S.
Alex Karp, Chief Executive Officer
Palantir Technologies, Q1 2026 Earnings Conference Call
The comment can be analyzed from multiple angles. First, Palantir has continuously implied that they do not have the capacity to handle all the inbound demand.
[…]we have 70 salespeople. A normal company of our size would have 7,000. Only seven of our salespeople actually even really sell. We are doing what a normal company would do with 7,000 salespeople, with seven people.
Alex Karp, Chief Executive Officer
Palantir Technologies, Q1 2026 Earnings Conference Call
So the question then becomes: why isn’t Palantir increasing its sales force to meet customer demand? The answer to why Palantir is intentionally not meeting demand, that I can think of, is quite attractive for Palantir.