Palantir’s U.S. commercial unit tops government

Palantir Technologies (PLTR)’ latest quarterly results show a major shift in its business mix, with U.S. commercial revenue surpassing U.S. government revenue for the first time. In the third quarter of 2026, U.S. commercial revenue reached $984 million, edging past $953 million from U.S. government customers. This milestone marks a turning point for a company long associated primarily with public‑sector and defense work, as private‑sector clients now represent the larger share of its U.S. business.

The change underscores how rapidly Palantir’s commercial operations have scaled. U.S. commercial revenue grew 148% year over year in the quarter, compared with a 96% increase in U.S. government revenue. Management describes customer demand for the company’s artificial intelligence tools as extremely strong, particularly in the United States.

For the third quarter, Palantir reported total revenue of $2.31 billion, beating Wall Street expectations of $2.18 billion. Revenue nearly doubled from the prior year and exceeded $2 billion in a quarter for the first time in the company’s history. Adjusted earnings per share were 44 cents, above the 41 cents analysts expected, and net income more than doubled to $1.13 billion, or 44 cents per share.

The company raised its outlook alongside the strong results. It now expects U.S. commercial revenue in excess of $3.56 billion for the full year. Overall, Palantir projects about $2.65 billion in revenue for the fourth quarter and about $8.53 billion for full‑year 2026, reflecting confidence that its rapid growth can continue.

Palantir’s commercial momentum is supported by broader and deeper relationships with private‑sector clients. In the third quarter, the U.S. commercial customer count rose 29% year over year to 686 customers. The company’s top 20 accounts generated an average of $146 million per customer over the past 12 months, an increase of 76% from a year earlier.

Signed but unrecognized U.S. commercial deal value also expanded sharply. The value of U.S. commercial agreements that are already contracted but not yet recorded as revenue increased 79% to $6.5 billion. These figures indicate a growing pipeline of business that is expected to convert into revenue over time as software deployments progress.

The shift toward commercial customers and the strong financial performance have drawn positive attention from Wall Street. Bank of America analyst Mariana Perez Mora reiterated a Buy rating on Palantir and set a price target of $255. She highlighted that commercial demand is driving high‑margin growth, especially within the U.S. business.

Palantir’s main offerings include Foundry for private companies, Gotham for government agencies, and its Artificial Intelligence Platform (AIP), which enables customers to apply AI to their own data. Management characterizes demand for these AI tools as "absolutely ravenous" in the United States, linking the revenue surge to heightened interest in software AI solutions.

Despite the rapid expansion, the company faces challenges in sustaining its growth trajectory. New U.S. commercial contract value increased 11% year over year in the third quarter, a steep slowdown from the growth rate in the previous period. This raises questions about how quickly fresh commercial bookings are accumulating relative to the recent surge in recognized revenue.

Palantir’s leadership also acknowledges operational constraints as demand accelerates. CEO Alex Karp has noted that demand is running ahead of what the company can deliver, suggesting that execution capacity will be a key factor in maintaining momentum. The balance between robust current results, a large backlog of signed deals, and the pace of new contract wins will be central to how Palantir’s commercial transformation develops from here.