Palantir started in 2003 with money from the CIA's venture arm, In-Q-Tel, and a single goal: help intelligence agencies pull scattered data into one place to track threats. More than two decades later, the same company is one of the most expensive stocks in the market and a favorite of retail investors who often cannot explain what it sells.
Here is the plain version. The company builds software that takes messy data from dozens of separate systems, organizes it, and lets people make faster decisions on top of it.
Soldiers use it to plan operations. Hospitals use it to move patients. Carmakers use it to run factories.
The stock trades around $136, down from a 52-week high above $207. The market value sits near $312 billion. That price is the whole debate, and it only makes sense once you understand where the revenue comes from.
Two Engines: Government and Commercial
Palantir splits its business into two segments. Government work is the older, larger one. Commercial work is the faster-growing one.
In 2025 the company brought in about $4.48 billion in total revenue, up 56% from the year before. Government accounted for roughly $2.4 billion of that, and commercial made up the other $2.07 billion. The split is close to even now, even though the company was almost entirely government-funded a decade ago.
The growth story has flipped to the commercial side. In the fourth quarter, U.S. commercial revenue jumped 137% from a year earlier while U.S. government revenue grew 66%. The government contracts pay the bills and rarely disappear, but the commercial side is what investors are paying up for.
The Four Platforms
Palantir sells four main software products, and knowing the names helps you read its earnings.
Gotham is the original. It is the intelligence and defense platform, used by the U.S. military and allied agencies to connect surveillance, logistics, and field data into one picture.
Foundry is the commercial version of that same idea. It acts as a central operating system for a company's data, pulling sales, supply chain, and finance information into one model a business can actually use.
Apollo is the plumbing. It pushes software updates and keeps the platforms running across cloud, on-site, and classified environments where normal software cannot reach.
AIP, the Artificial Intelligence Platform, launched in 2023 and is the reason the stock re-rated. It plugs large language models into a company's real operations while keeping security controls in place, so an AI assistant can act on live business data instead of just chatting.
How the Money Comes In
Palantir lands a customer, proves value on one problem, then expands across the business. AIP turned that motion into a sprint.
The company runs "bootcamps" where it drops engineers into a prospect for a few days to build a working use case on the spot. Many of those turn into paid contracts. It is an unusual sales model, and it has worked.
U.S. commercial customers reached 571 by the end of 2025, up 49% in a year. Total customers hit 954, up from 711. Each new account tends to start small and grow as more departments adopt the platform, which is why the commercial number compounds so fast.
The Profit Turn Most People Missed
For years the knock on Palantir was that it burned cash and leaned on stock-based pay. That changed.
The company posted GAAP net income of about $1.625 billion in 2025, more than triple the $462 million it earned the prior year. Operating margin came in near 32%, and gross margin sits above 80%, which is normal for high-end software.
Management's "Rule of 40" score, a measure that adds revenue growth to profit margin, reached 127% in the fourth quarter. Anything above 40 is considered healthy. Real profitability removes the easiest bear argument, because this is no longer a story stock living on promises.
The Valuation Problem
This is where buyers and skeptics split. Palantir trades at nearly 70 times trailing sales and more than 200 times trailing earnings. Those are not normal numbers, even for fast-growing software.
Compare it to other names investors might own. Snowflake, a high-growth data platform with more than $4 billion in annual revenue, trades at roughly 19 times sales. Datadog, the monitoring-software firm at about $3.4 billion in revenue, sits around 24 times.
The older giants look cheap by comparison. Salesforce, doing $41.5 billion in annual revenue, trades at about 3.6 times sales. Booz Allen Hamilton, which does similar government data and analytics work on roughly $12 billion in revenue, trades at under one times sales.
That last comparison is the sharpest one. Booz Allen sells data and consulting to many of the same federal agencies, yet the market values Palantir's revenue at more than 80 times the multiple. The gap is a bet that Palantir's software scales in a way a services firm never can.
Our best AI stocks guide breaks down other names riding the same trend.
The Bet Behind the Price
The number that decides the next leg is U.S. commercial growth. The company guided to total 2026 revenue growth of at least 61% and expects U.S. commercial revenue to top $3.144 billion, a jump of more than 115%.
If commercial keeps compounding at triple digits, the premium has a story behind it. If that growth slows toward the rest of the software industry, a 70-times-sales stock has a long way to fall.
Government revenue gives Palantir a floor that few high-multiple peers have, and the commercial business gives it the upside. The price already assumes both keep working. Anyone deciding whether to own it is really making one call: whether software that started inside the intelligence community can keep winning the open market at the pace it has shown so far.
