Palantir Emerges as the Software Sector's Nvidia

Few earnings reports were as keenly awaited as those from the group nurtured by the controversial Peter Thiel and led by the eccentric Alex Karp.

Reflecting the personalities of its leaders, Palantir prefers a decidedly unconventional style. This is perfectly mirrored in the header of the press release accompanying its quarterly results, where the group announced that it had "pulverized" the consensus.

Indeed Q1 2026 revenue surged by 85% y-o-y. The metric closely monitored by all analysts was, of course, revenue growth in the private sector segment, which leapt 133% and now represents nearly half of consolidated revenue.

Palantir is thus gradually shedding its image as a mere arm of the US intelligence services, to the extent that over a third of its consolidated revenue is now generated abroad. This was naturally the other key element scrutinized by the analyst community.

The Denver-based firm, which undertook a strategic pivot in late 2024, largely by trimming its variable compensation, once again demonstrated the power of its operating leverage this quarter: revenue doubled y-o-y, while its cost structure increased by just a quarter. Consequently, operating profit soared from $176m to $754m in the space of twelve months.

These truly staggering results enabled Palantir to quadruple its EPS, despite stock-based compensation expenses that remain significant - still $202m in the last quarter, or 12% of revenue. However, this is a far cry from the mind-boggling figures of the past, such as four years ago, when stock-based compensation reached 4/5 of revenue.

As we wrote in our last earnings commentary, Palantir continues to defy the laws of gravity. A slowdown is nevertheless expected in Q2, which should see "only" 10% revenue growth, compared to 16% between Q4 2025 and Q1 2026.

Palantir remains capitalized like a fortress with over $8bn in excess cash. For now, there are no share buybacks - what would be the point at such valuation multiples? - nor dividends or acquisitions. Commercial expansion and capital hoarding therefore remain central to its management.

Palantir is currently valued at 70x its expected EBITDA over the next twelve months, one notch below its 5-year average. The Nvidia of the software sector now commands an enterprise value of $340bn, placing it 38th in the North American rankings - between AT&T and T-Mobile. Both carriers will probably be left far behind by the end of the year.

See also Palantir: AI in Uniform Attempts to Win Over Wall Street, which we also published this morning.