Scale AI expects revenue for 2026 to exceed $1 billion, which is a decline from the $2 billion estimated in 2025. The company earned $870 million in 2024. This contraction follows Meta’s June 2025 investment of $14.3 billion for a 49 percent non-voting stake. This transaction implies a total company valuation of $29 billion. The 2026 guidance of $1 billion is a failure for a company with a $29 billion valuation.
Scale AI’s data labeling and reinforcement learning from human feedback business accounts for 60 percent of its revenue. The government and defense segment accounts for 20 percent. The generative AI platform for applications accounts for the remaining 20 percent. The company maintains a workforce of over 100,000 contractors. Scale AI’s pricing includes per-annotation rates for simple tasks and higher rates for multi-step chain-of-thought reasoning traces.
The Meta conflict and frontier lab attrition
Meta’s stake in Scale AI caused Google, OpenAI, and xAI to reduce or cancel their contracts. These companies refused to route proprietary training data through a vendor with a direct competitor as a major owner. The deal brought Alexandr Wang into Meta to lead a superintelligence research lab. Jason Droege assumed the role of Interim CEO. Scale AI’s data labeling and reinforcement learning from human feedback business accounts for 60 percent of its revenue.
The business loss occurred because the frontier-lab accounts represented a meaningful share of the revenue that pushed Scale AI to its $870 million 2024 run rate. Mercor and Surge AI captured the market share lost by Scale AI. Mercor reached a $20 billion valuation in July 2026 and recorded $2.0 billion in gross revenue in mid-2026. Surge AI pursued a $15 billion valuation in 2026 and maintained a $1.4 billion run rate in late 2025.
Scale AI defense contracts and workforce
Scale AI holds multiple large contracts with the United States Department of Defense. The company won a $500 million contract for data processing. It secured a $250 million contract in 2023 for federal agency access to tools. A $100 million ceiling agreement exists with the Chief Digital and Artificial Intelligence Office. The Thunderforge program, a flagship AI agent initiative for military planning, was won by Scale AI in March 2025 in partnership with Anduril and Microsoft.
The company manages its global workforce through subsidiaries like Remotasks and Outlier. This network of over 100,000 contractors performs data labeling tasks. Scale AI also provides physical AI data collection through its San Francisco R&D lab. This platform provides demonstration data for robotics hardware platforms. Customers include Physical Intelligence, Generalist AI, and Cobot.
Palantir’s commercial acceleration in Q2 2026
Palantir reported $1.935 billion in revenue for the quarter ended June 30, 2026. This figure shows 93 percent growth year-over-year and 19 percent growth sequentially. U.S. commercial revenue grew 149 percent to $764 million. U.S. government revenue grew 90 percent to $809 million. The U.S. commercial revenue for the second quarter grew 149 percent compared to the same period in 2025.
Palantir’s U.S. commercial revenue in Q1 2026 was $595 million, which was a 133 percent increase year-over-year. The U.S. government revenue in Q1 2026 was $687 million, which was an 84 percent increase year-over-year. Total U.S. revenue in Q1 2026 was $1.282 billion, representing a 104 percent increase year-over-year. The company uses AIP Bootcamps to accelerate the conversion of pilot programs into enterprise licenses.
Palantir profitability and cash position
Palantir achieved a Rule of 40 score of 155 percent in the second quarter of 2026. The company’s Q1 2026 Rule of 40 score was 145 percent. GAAP income from operations for the quarter ended June 30, 2026, was $912 million, representing a 47 percent margin. Adjusted operating income reached $1.194 billion with a 62 percent margin. Palantir holds $9.2 billion in cash, equivalents, and short-term Treasuries.
The company has no debt. Adjusted free cash flow for the quarter was $1.220 billion, which is a 63 percent margin. The company’s Q1 2026 adjusted free cash flow was $925 million, which is a 57 percent margin. Palantir’s net dollar retention reached 157 percent in the second quarter. The net dollar retention in Q1 2026 was 150 percent.
Palantir contract momentum and guidance
The U.S. commercial remaining deal value for Palantir stood at $6.238 billion, which is a 124 percent increase year-over-year and a 27 percent sequential increase for the company. Palantir’s closed total contract value reached $3.373 billion in the second quarter of 2026. This amount includes $2.132 billion from U.S. commercial clients. Management raised 2026 full-year revenue guidance to between $8.150 and $8.158 billion.
The U.S. commercial revenue guidance for 2026 exceeds $3.424 billion. Palantir’s remaining performance obligations were $4.90 billion in the second quarter. This value was $4.45 billion in the first quarter. The customer count grew from 769 to 1,007 in one year. Roughly 96 percent of the growth came from organizations that had already bought something from Palantir.
The defense technology successor landscape
Anduril generated $2.2 billion in revenue in 2025 and raised $5 billion at a $61 billion valuation. Helsing raised $1.8 billion at an $18 billion valuation. Shield AI secured $2 billion in new financing at a $12.7 billion valuation. Anduril’s Lattice platform connects 40 applications, 36 data feeds, and 37 sensors or effectors.
Anduril’s software is used by the U.S. Army for its next command-and-control architecture. NATO selected the Lattice platform for an allied air-operations data platform. Palantir participates as one of the companies inside the Anduril-led team. Will Scale AI ever regain the trust of frontier labs after the Meta deal?
| Entity | 2026 Revenue/Outlook | Valuation | Primary Focus |
|---|---|---|---|
| Scale AI | $1B+ guidance | $29B | Data Labeling |
| Mercor | $2.0B (mid-2026) | $20B | Data Labeling |
| Surge AI | $1.4B (late 2025) | $15B | Data Labeling |
| Palantir | $8.15B-$8.158B | High | AIP / Ontology |
| Anduril | $2.2B (2025) | $61B | Defense Systems |
You should ignore the valuation headlines and look at the contract backlog to see the real story. Palantir remains the better investment because it maintains hyper-growth while Scale AI faces a massive revenue contraction.
