Palantir Technologies (PLTR) rose about 1% on Friday after the U.S. Defense Intelligence Agency withdrew a procurement solicitation that the company had challenged through a bid protest.

The agency said it pulled the request on its own initiative. The contract concerned an AI-enabled intelligence platform intended to support military operations, including targeting functions.

Palantir filed its protest in May, arguing that the government was attempting to build a new system even though commercial technology was already available. The withdrawal gives Palantir a procedural victory, but it does not amount to a contract award. It also means the agency will likely have to reconsider how it approaches the acquisition, delaying the rollout of the platform itself.

The dispute matters because federal procurement decisions can shape which software providers gain access to long-running defense programs. For Palantir, whose business has historically been tied closely to government customers, the structure of new AI-related solicitations is a key issue alongside reported revenue and cash flow.

PLTR was trading around $122.92, leaving the stock down roughly 30% in 2026. Shares had peaked above $200 in November 2025 before declining. Even so, PLTR has gained about 5% over the past 30 days, holding steadier than many AI-related stocks that have seen sharp moves in both directions.

Valuation Debate Centers on Growth Assumptions

The debate over Palantir largely turns on the growth rate investors use to assess the company.

Bearish views typically rely on discounted cash flow models that assume annual growth of 20% to 30%. Under those assumptions, PLTR’s valuation — above 100 times forward earnings and near 65 times trailing price-to-sales — appears difficult to justify.

Palantir’s Q1 2026 results challenged that framework. Adjusted free cash flow was $925 million, up 150% year over year. Adjusted earnings per share reached 33 cents, also rising roughly 150%. Those figures represent growth rates five to seven times higher than the assumptions commonly used in more conservative models.

Chief Executive Officer Alex Karp has also offered a much larger free cash flow target. He told CNBC that Palantir expects to generate $15 billion to $18 billion in free cash flow within two years. The company’s full-year 2026 revenue guidance stands at $7.65 billion to $7.66 billion, implying 71% growth, while its U.S. commercial revenue guidance calls for at least 120% growth.

Karp’s prior forecast is another point cited in the discussion. In 2022, he projected $4.5 billion in 2025 revenue. Actual 2025 revenue came in at $4.475 billion, nearly matching that estimate.

Q2 Earnings Due August 3

Palantir’s client base, which is heavily weighted toward government customers, has helped shield the company from some of the broader volatility affecting AI stocks amid inflation data and geopolitical uncertainty.

However, recent earnings reports have delivered strong results without producing a sustained move in the stock. That pattern has frustrated bullish investors who focus on the company’s financial performance.

For full-year 2026, Palantir raised its adjusted free cash flow guidance to a range of $4.2 billion to $4.4 billion. That figure is already above what a model based on 20% to 30% growth would project.

The next report will also be read for whether growth is coming from both sides of the business. Palantir has emphasized U.S. commercial expansion, while government contracts remain central to its revenue base and can be affected by procurement timing.

Technical Picture Remains Weak

From a technical perspective, PLTR remains in a downtrend. The stock is trading in the low $120s, well below its 200-day moving average of about $154. A decline on July 22 indicated that selling pressure has not disappeared.

Palantir is scheduled to report Q2 2026 earnings on August 3. Free cash flow will be one of the key figures watched in the report.