Palantir’s growth potential has become a lot more promising.
When you think of stocks that have had immense success over the past year, it’s hard not to think of software company Palantir Technologies (PLTR -0.98%). In that time, its stock is up around 400%, far more than the S&P 500 (^GSPC -0.43%), which is up around 14%, or any other S&P 500 stock in that span.
Like many other stocks, Palantir has been a huge beneficiary of recent artificial intelligence (AI) hype, but there seems to be a specific reason Wall Street has increasingly become obsessed with the stock: the recent success of its commercial business.
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For most of its existence, Palantir’s main platform, Gotham, has been built mainly for government entities like the CIA, Department of Defense, and FBI. Although this has been a good business for Palantir, relying solely on government contracts could limit growth due to future budget constraints and political volatility.
With the introduction of Palantir’s AI Platform (AIP) — which is designed to use AI to automate operational processes — it has shown that it can be successful in catering to commercial businesses. In the second quarter (Q2), Palantir’s U.S. commercial business increased revenue 93% year over year to $306 million and accounted for around 30.5% of its total revenue.
Here is how much the segment made in the previous three quarters:
Q1 2025: $255 million
Q4 2024: $214 million
Q3 2024: $179 milliom
Q2 2024: $159 million
With Palantir’s commercial business showing promise, its total addressable market is always widening. The stock has admittedly become very expensive with Wall Street’s obsession, but its long-term growth potential just became more promising.
Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Palantir Technologies. The Motley Fool has a disclosure policy.