Why Palantir stock soared today

Shares of Palantir (PLTR 22.33%) were soaring today after the artificial intelligence (AI)-focused software stock posted better-than-expected results in its third-quarter earnings report last night as revenue growth accelerated for the fifth consecutive quarter. It also showed strong margin expansion.

At 10:02 a.m. ET, the stock was up 20.3% on the news.

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Palantir shines again

Palantir, known for its data fusion software that enables governments and businesses to find and integrate data from multiple sources to produce useful information, easily beat revenue estimates for the quarter, driven by strong growth in the U.S.

Total revenue rose 30% to $725.5 million, well ahead of the $701.1 million consensus. US revenue rose 44% to $499 million, which included a 54% jump in US commercial revenue to $179 million, and a 40% increase in US government revenue to $320 million.

Driven by its new artificial intelligence platform (AIP), the company has now reported five consecutive quarters of accelerating revenue growth, showing that it is establishing itself as a valuable software platform in the AI ​​era.

On the earnings call, CEO Alex Karp described large language models as commodities, but said institutions need the kind of tools Palantir provides to leverage their data.

On the bottom line, margins grew as the business was scaled up. Palantir reported a profit margin of 16% and an adjusted operating margin of 38% (GAAP). Adjusted earnings per share rose from $0.07 to $0.10, ahead of the consensus estimate of $0.09.

Karp said: “We’ve absolutely gutted this quarter, driven by relentless AI demand that won’t slow down. This is an American-driven AI revolution that has taken hold.”

Can Palantir Keep Winning?

Palantir has been one of the best-performing stocks on the market this year, as shares have now nearly tripled.

Investors were also encouraged by its guidance increase, as Palantir now sees full-year revenue of $2.805 million to $2.809 million.

The stock is expensive, but the company is clearly benefiting from AI momentum. If revenue growth remains strong, the stock still has great upside potential from here.