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Okay, Palantir. Here's the uncomfortable question at the center of this one. The business looks incredible. The price looks terrifying. And both might be true. Because the numbers Palantir just put up are genuinely absurd. Q2 revenue, $1.935 billion, up 93% year-over-year. US commercial, up 149%. 62% operating margins.
And the stock? About 194 bucks a share. A $466 billion market cap. Only about 6% off its 52-week high. So, the real question isn't is Palantir a good company? It's how successful does Palantir have to become for me to earn a good return buying at 194? That's the breakdown today. Let's get into it. Oh, man.
93% for a company this size? That's not normal software growth. That's like startup on steroids growth. Exactly. And it's not just growth. US commercial revenue, that's 764 million in the quarter. US government, up 90% to 809 million. So, both engines firing. Not just defense contracts anymore. Right?
And here's the wild part. Margins. Adjusted operating margin, 62%. Adjusted free cash flow margin, 63%. Okay, wait. 63% free cash flow margin while growing 93%? Usually you get one or the other. Growth or margins. Palantir's doing both? Both. Plus 73 deals worth at least $10 million in one quarter. And they've got 6.24 billion in US commercial remaining deal value, up 124%.
That's the pipeline, right? Future contracts? Sort of. One footnote, though. That 6.24 billion isn't all guaranteed. A lot of those contracts can be canceled for convenience. Great demand signal, not locked-in revenue. Fair. Important distinction. But still, management raised full-year guidance to about 8.15 billion in revenue.
That's roughly 82% growth for the year. Okay, so the bull case writes itself. One of the strongest AI monetization stories in enterprise software, actual profits, actual cash flow. Who's the loudest bull? Dan Ives. He initiated with a buy and a $250 target. He just named Palantir one of his favorite tech plays going into 2027 alongside Nvidia, Microsoft, Apple, CrowdStrike.
His argument is Wall Street underestimates the AI spending wave. He talks about a $4 trillion tech spending cycle ahead. And UBS went to 250, too, right? Yeah. UBS raised to 250 in mid-September. Kept the buy. So, the bulls are basically saying, yes, it's expensive on today's numbers, but today's earnings are the wrong denominator.
Palantir is going to be way bigger. All right. And the other side? Because somebody's got to be the buzzkill. Michael Burry, of the Big Short fame. Oh, of course. Burry's last publicly disclosed portfolio included big put positions on Palantir and Nvidia. And he's remained outspokenly bearish on the AI trade.
So, not Palantir's business will collapse. More like More like the multiple could collapse. And that's a crucial distinction. You don't need the company to fail for the stock to get crushed. And then there's RBC just sitting there with a $90 target. Underperform, yes. Though, that call's from July, right before Q2 earnings.
So, it's a little stale. Still, 90 versus 250. That's an insane spread for a $465 billion company. It really is. The average analyst target is about 195 bucks. The stock is at 194. So, Wall Street collectively is saying, great company, already priced in. And the weird part? Ratings are still mostly bullish.
20 buys, nine holds, only two sells. But the average target is barely above the current price. Exactly. Analysts may like the company more than they like the upside from here. Goldman said exactly that, didn't they? Pretty much. Goldman reiterated neutral with a 204 target in late September. But here's the funny part.
After meeting with the CFO, Goldman actually got more confident in Palantir's competitive moat. They think the whole model of embedding with customers and turning that into reusable software is harder to copy than people assume. So even the neutral camp is like, "Amazing company, wrong price." Fantastic company, strong moat, enormous opportunity, a lot of it is already in the stock.
That's Goldman in one sentence. Okay, so let's talk about the risk. Because at what? 57 times this year's guided revenue, 101 times forward earnings? 164 times trailing earnings. Okay, that's That's a lot of perfection priced in. That's the number I keep staring at. 465 billion divided by 8.15 billion in expected revenue.
For this to work, Palantir doesn't just need to grow, it needs to stay one of the fastest growing large software businesses on Earth for years, keep these insane margins, and dodge Microsoft, Google, Databricks, Snowflake, all of them. And the expectations game? This is the part that scares me most, honestly.
Right. Palantir can't just beat earnings anymore. It has to crush them. Imagine next quarter they report 55% growth and 50% margins. For any normal company, that's spectacular. For Palantir? The stock could still sell off hard because investors were expecting something even better. Exactly. That's what happens when expectations get this extreme.
Plus, there's the macro angle. The 10-year Treasury is around 5.3%. Levels we haven't seen in about 24 years. Ouch. And a stock at a 100 times forward earnings is basically selling you profits from like 2035. Right. When investors can get 5 plus percent from treasuries, the math on distant earnings gets brutal.
So, could the stock still go up from here? I mean, the business is genuinely phenomenal. Absolutely, it could. Let's do the bull math. Suppose Palantir keeps compounding. 8 billion this year, 12 next, 17, 19, then 25 plus, then 35 to 40 billion by 2030 with software margins. Suddenly, 465 billion doesn't look insane a few years from now.
But notice what had to happen. Palantir has to become a 35 to 40 billion-dollar revenue company fast. Anything less and 194 was too expensive. And that's just to make today's valuation easier to defend. For the stock to deliver a great return from here, Palantir either has to grow even larger, sustain a premium multiple, or both.
That's why I wouldn't call this a normal growth investment anymore. It's a very high expectations compounder. Both the bulls and the bears are right. The bulls are right about the business. The bears are right about the price. So, the real question isn't will Palantir succeed? The real question is, how successful does Palantir have to become for me to earn an attractive return buying at 194?
And that's a much tougher question. And the wildest part? The company could massively outperform operationally and the stock could still disappoint. That's the risk I'd take most seriously. All right, the next earnings report is currently estimated for early November. November 2nd according to some market calendars, but Palantir hasn't officially confirmed that date yet.
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