The latest round of tech earnings revealed significant outperformance from several major players, with Palantir and Snap both reporting results that exceeded analyst expectations, while investment gains from private AI companies like Anthropic and OpenAI have notably distorted the broader S&P 500 earnings picture [1][2][3]. Microsoft, Amazon, and Alphabet booked substantial paper gains in the most recent quarter due to their stakes in Anthropic and OpenAI, with both AI firms valued just under $1 trillion in private markets [1]. These investment gains contributed to S&P 500 earnings growth of 48% year-over-year, but when excluding these one-time items, growth was closer to 29%, aligning more closely with analyst forecasts of 24% [1]. According to LSEG, companies reported earnings 7% above expectations this quarter, compared to a long-term average of 4.4% [1].
Palantir delivered a standout quarter, with revenue climbing 93% year-over-year to $1.94 billion, surpassing the $1.80 billion expected by LSEG [2]. Adjusted earnings per share were 41 cents, beating the 35-cent estimate, and net income soared to $1.07 billion from $329 million a year ago [2]. U.S. commercial revenue surged 149% to $764 million, and the company raised its full-year revenue guidance to between $8.15 billion and $8.16 billion, up from prior guidance of $7.65 billion to $7.66 billion [2]. Palantir's stock jumped 12% after the results, despite being down 29% year-to-date amid concerns about slowing AI growth [2]. CEO Alex Karp expressed confidence that the strong growth would continue for at least another 18 months [2].
Snap also reported better-than-expected Q2 results, with revenue rising 19% to $1.6 billion versus the $1.54 billion expected, and global daily active users reaching 493 million, ahead of the 487 million estimate [3]. The company's net loss narrowed to $164 million from $262.6 million a year ago, and adjusted earnings came in at $250 million, beating the $192 million estimate [3]. Snap's stock rose about 8% in extended trading following the report [3]. The company forecast Q3 sales between $1.7 billion and $1.74 billion, topping analyst estimates, and raised its full-year infrastructure cost guidance by $50 million to support AI and machine learning investments [3]. CEO Evan Spiegel cited improved advertising momentum and product enhancements as key drivers of growth, while also noting ongoing regulatory monitoring [3].
The market implications are significant, as the earnings beats from Palantir and Snap provided a positive boost to their stocks and the broader tech sector, even as analysts caution that headline S&P 500 earnings are inflated by non-operational investment gains from private AI stakes [1][2][3].
CONCLUSION
Palantir and Snap's strong earnings and raised guidance have fueled optimism in the tech sector, driving notable stock gains. However, analysts warn that S&P 500 earnings growth is artificially elevated by Big Tech's private AI investment gains, suggesting underlying business growth is more modest. Investors should remain mindful of the distinction between operational performance and one-time investment windfalls.