Palantir Technologies Inc. (PLTR) is having a good Tuesday. The stock jumped about 17% in premarket trading after the company reported second-quarter results that blew past expectations and raised its outlook for the rest of the year. The message from CEO Alex Karp? 'Sovereign AI' is winning, and Palantir is cashing in.

Let's get to the numbers. The company reported second-quarter revenue of $1.94 billion, topping analyst estimates of $1.80 billion. Adjusted earnings came in at 41 cents per share, ahead of the consensus estimate of 35 cents. Not bad for a company that some skeptics have long dismissed as overhyped.

But the real story is the guidance. Palantir now expects third-quarter revenue of $2.16 billion to $2.164 billion, well above the $1.997 billion analysts were looking for. And for the full year 2026, the company raised its revenue guidance from $7.65-$7.66 billion to a new range of $8.15-$8.16 billion, versus estimates of $7.69 billion. That's a significant jump, and it signals that management sees the AI boom continuing for a while.

Sovereign AI Drives Growth

So what's behind this surge? Karp, in an interview with CNBC, pointed to what he calls 'sovereign AI.' It's an approach that allows customers to control their data, technology, and the value created from AI deployments. Instead of relying solely on open- or closed-source models from big tech companies, Palantir helps enterprises and governments own their AI capabilities.

Karp said this strategy helped drive 93% business growth. U.S. revenue increased 115%, while U.S. commercial revenue climbed nearly 150%. Those are eye-popping numbers, and they suggest that Palantir is finding a sweet spot in the market.

Margins Remain Strong

It's not just about growth, though. Karp emphasized that Palantir continues to scale profitably. He highlighted an adjusted free cash flow margin of 63% and a Rule of 40 score of 155. For those unfamiliar, the Rule of 40 is a metric that combines revenue growth and profit margins; a score above 40 is considered good, so 155 is extraordinary.

Karp also took a swipe at some AI providers, criticizing those that, in his view, capture customers' intellectual property instead of helping them retain it. Palantir's model, he said, allows customers to keep the value created through its software. It's a positioning that seems to resonate with clients who are wary of handing over their data to AI giants.

Looking ahead, Karp said demand for sovereign AI, combined with the company's products and partnerships across AI infrastructure, should support strong growth over the next 18 months. That's a bold statement, but the numbers back it up so far.

Analysts See Commercial Momentum

Wall Street is taking notice. William Blair analyst Louie DiPalma told CNBC that Palantir continues to post strong commercial growth despite increasing competition from Anthropic and OpenAI. He noted that U.S. commercial revenue grew about 150% year over year, while total commercial booking value rose about 158%, up from 47% in the prior quarter. That acceleration is a key indicator that Palantir is gaining traction, not just defending its turf.

DiPalma also highlighted Palantir's AI platform, which offers customers greater security and control through open-weight models. And he pointed to the government business, including a large NATO contract for its Maven Smart System. Government contracts have long been a Palantir staple, but the commercial side is now driving the narrative.

The stock carries a Buy rating with an average price forecast of $187.17. Recent analyst moves include:

• Piper Sandler: Overweight (Maintains forecast to $230.00) (Aug. 4)
• Rosenblatt: Buy (Maintains forecast to $225.00) (July 30)
• Citigroup: Buy (Lowers forecast to $200.00) (July 24)

Even Citigroup's lowered target is well above the current price, so the sentiment is clearly bullish.

ETF Exposure

For those who prefer a more passive approach, Palantir is a major holding in several exchange-traded funds. It accounts for 8.36% of assets in the iShares Expanded Tech-Software Sector ETF (IGV), 7.48% of the Global X Defense Tech ETF (SHLD), and 7.75% of the First Trust Indxx Aerospace & Defense ETF (MISL).

Because of its large weighting, significant inflows or outflows in these ETFs can lead to automatic buying or selling of Palantir shares. So if you see the stock move on a day when there's no company news, it might just be ETF rebalancing.

Price Action

As of premarket trading on Tuesday, Palantir shares were up 16.60% at $146.51. That's a big move, and it reflects the market's enthusiasm for the quarter. Whether the stock can hold these gains through the regular session remains to be seen, but the fundamentals are certainly supportive.

In a market where AI hype often outpaces reality, Palantir is showing that it can deliver on the promise. The 'sovereign AI' narrative is resonating with customers and investors alike, and the numbers are backing it up. For now, it looks like Palantir is on a winning streak.