Palantir Technologies’ shares surged 11% in premarket trading on Tuesday after the data analytics firm delivered a stronger-than-expected fourth quarter, underscoring how rising government and enterprise spending on artificial intelligence is translating into real revenue momentum — even as political and ethical scrutiny around its work intensifies.

The company reported fourth-quarter revenue of $1.41 billion, comfortably ahead of Wall Street expectations of $1.33 billion, according to LSEG data. The results capped a volatile stretch for the stock, which had slumped sharply late last year amid broader concerns that enthusiasm around AI-linked software companies was running ahead of fundamentals.

Despite November marking Palantir’s worst month in two years, the stock still ended 2025 up 135%. That rally has cooled somewhat in early 2026, with shares down about 17% year to date at Monday’s close before the earnings-driven rebound.

Chief executive Alex Karp struck a confident tone following the release, calling the performance “the best results that I’m aware of in tech in the last decade” in an interview with CNBC. His remarks reflected a belief that Palantir has moved beyond speculative hype into a phase where AI adoption is driving durable, large-scale contracts, particularly in the public sector.

Founded as a data intelligence company focused on complex analytics for governments, Palantir has increasingly positioned itself as a core infrastructure provider for AI-driven decision-making. Its software is used by U.S. agencies, including the Department of Defense, the Internal Revenue Service, and the Department of Homeland Security, as well as by corporate clients seeking to integrate AI into operations.

That government focus is now a central pillar of its growth story. Palantir said U.S. government revenue rose 66% year on year, highlighting accelerating adoption of its platforms across defense, security, and public administration. The company has secured a string of large, multi-year deals that have bolstered confidence in the visibility of future earnings.

In July, Palantir signed a software contract worth up to $10 billion with the U.S. Army, one of the largest agreements in its history. That was followed in December by a $448 million contract with the U.S. Navy aimed at accelerating shipbuilding production, a deal that underscored the Pentagon’s push to use AI and data analytics to modernize procurement and logistics.

Investors have long wrestled with Palantir’s valuation, which has often been described as stretched relative to traditional software peers. Yet some analysts now argue that the company’s pricing looks more defensible in the context of the wider AI ecosystem.

“Although Palantir’s valuation is still frothy, it appears more reasonable relative to recent venture rounds for companies tied to the AI ecosystem,” said Louie DiPalma, an analyst at William Blair, in a note published ahead of the earnings release.

He added that Palantir’s operating margin could expand from around 50% to as much as 65% over the next five years, driven largely by growth in high-margin government and defense contracts.

That margin story is central to Palantir’s longer-term appeal. Unlike many AI-focused firms that continue to burn cash as they chase scale, Palantir has emphasized profitability and disciplined cost control, arguing that its platforms are already deeply embedded in customer workflows and therefore expensive to replace.

Still, the company’s close ties to law enforcement and immigration agencies remain a flashpoint. In recent weeks, Palantir’s work with U.S. Immigration and Customs Enforcement has drawn renewed attention following protests in Minneapolis, where federal agents shot two demonstrators during clashes tied to immigration enforcement operations.

While Palantir was not directly involved in the incidents, the controversy has revived broader debates about the role of private technology firms in surveillance, policing, and immigration control.

This has exposed Palantir to stark juxtaposition. On one hand, it is benefiting from governments’ willingness to spend heavily on AI tools amid geopolitical tensions and national security concerns. On the other hand, that same dependence on state power exposes the company to reputational and political risks that do not show up neatly in earnings models.

However, Palantir appears well-positioned to capture a significant share of accelerating AI spending in 2026, particularly from defense and public sector clients seeking to turn vast data troves into operational advantage. The challenge for investors is weighing that opportunity against the ethical, regulatory, and political questions that continue to shadow the company’s ascent.

Elon Musk on Monday confirmed that SpaceX has acquired his artificial intelligence startup xAI in a deal that reshapes the global technology landscape and sets a new benchmark for mergers and acquisitions.

The transaction formally unites Musk’s ambitions in artificial intelligence and space infrastructure, combining the world’s most valuable private rocket company with the developer of the Grok chatbot.

The decision marks the clearest step yet toward building a tightly integrated personal conglomerate that spans space, AI, communications, mobility, and neurotechnology, binding his most ambitious bets into a single corporate orbit.

Musk said on Monday that SpaceX had acquired xAI in a deal that values SpaceX at about $1 trillion and xAI at roughly $250 billion, according to people familiar with the transaction. Investors in xAI will receive 0.1433 shares of SpaceX for every xAI share, while some executives are being offered a cash alternative priced at $75.46 per share. The combined entity is expected to price shares at around $527, one of the people said.

The transaction, first reported by Reuters last week, overtakes the $203 billion Vodafone–Mannesmann takeover in 2000 to become the largest merger ever recorded, based on data compiled by LSEG. It also comes as SpaceX is preparing for what could be a landmark initial public offering later this year, with people familiar with the matter saying the listing could value the company at more than $1.5 trillion.

Musk framed the deal in sweeping terms, describing it as the next phase in a shared mission to extend intelligence beyond Earth. Behind the rhetoric, the industrial logic is more concrete. xAI, the developer of the Grok chatbot, is one of the most capital-intensive businesses in the AI race, with costs driven by chips, data centers, and electricity. SpaceX, through its Starlink satellite network, already operates one of the world’s largest private communications infrastructures and generates steady cash flow.

By bringing xAI under the SpaceX umbrella, Musk is effectively internalizing the infrastructure stack needed to compete with rivals such as Alphabet’s Google, Meta, Amazon-backed Anthropic, and OpenAI. Starlink offers global data distribution and a growing enterprise and government customer base, while SpaceX’s launch and satellite operations provide leverage over where and how future compute and data assets are deployed.

Ali Javaheri, a senior emerging spaces analyst at PitchBook, said Starlink was already a cash-flow engine and that the addition of AI created a new revenue layer. He noted that Starlink could also become a distribution surface for AI services and data, particularly if policy shifts allow certain categories of customer data to be used for model training. The longer-term prospect of orbital or space-based data centers, while still speculative, adds to a narrative that positions SpaceX as an integrated infrastructure platform rather than a pure rocket company.

The deal also underscores how Musk has been consolidating his businesses into a more unified structure. Last year, he merged social media platform X into xAI through a share swap, giving the AI startup direct access to real-time data and a built-in distribution channel. Earlier in his career, he used Tesla stock to acquire solar installer SolarCity, folding energy generation into his electric-vehicle ecosystem. Alongside Tesla, Neuralink, and the Boring Company, the SpaceX–xAI tie-up tightens what investors increasingly view as a single, interconnected industrial empire.

However, that strategy is believed to have come with risks. Investors have already expressed unease about aggressive spending and valuation assumptions across Musk’s companies. SpaceX was last valued at about $800 billion in a recent insider share sale, while xAI was valued at roughly $230 billion as recently as November, according to the Wall Street Journal. Combining them at higher figures concentrates both upside and downside into one balance sheet, just as public markets remain sensitive to capital intensity in AI and infrastructure.

Regulatory and governance questions are also likely to follow. SpaceX holds billions of dollars in contracts with NASA, the U.S. Department of Defense, and intelligence agencies, all of which have some authority to review transactions for national security implications. The deal may also draw attention to conflicts of interest, given Musk’s overlapping leadership roles and the potential movement of engineers, data, and proprietary technology between his companies.

Still, the timing suggests strategic calculation. Hyperscalers and AI developers are locked in a global build-out of compute and data-center capacity, with AI-related data-center deals hitting a record $61 billion in 2025. By merging xAI into SpaceX ahead of a potential IPO, Musk is presenting investors with a broader story: not just rockets and satellites, but a vertically integrated platform that links launch, connectivity, data, compute, and AI services.

In effect, the transaction formalizes what has been taking shape for years. Musk is no longer running a collection of loosely related ventures. He is assembling a personal conglomerate, designed so that each business feeds the others, and positioning it for the public markets as a single, expansive bet on the infrastructure of the future.

Disney shares edged higher in premarket trading on Tuesday as investors turned their attention away from headline earnings and toward a question that has increasingly dominated sentiment around the stock: who will succeed Bob Iger as chief executive.

The media giant’s shares were up 0.14% as of 7:05 a.m. ET, a muted rebound after the stock fell 7% on Monday. That sell-off came even as Disney reported solid quarterly results, highlighted by its Experiences division — which includes theme parks, resorts, and cruise operations — surpassing $10 billion in revenue for the first time in a single quarter.

Overall, Disney posted quarterly revenue of about $26 billion, up 5% year on year and ahead of Wall Street expectations of $25.7 billion. The numbers underscored the continued resilience of its parks-led businesses at a time when streaming profitability and legacy media assets remain under pressure.

Still, the market reaction made clear that earnings strength alone is no longer the decisive factor for Disney’s valuation.

Succession uncertainty weighs on sentiment

At the center of investor unease is the unresolved leadership transition. Disney’s board is meeting this week and is expected to vote on Iger’s successor, according to people familiar with the matter who spoke to CNBC on condition of anonymity. The decision would mark the second attempt to engineer an orderly handover from Iger, one of the most influential executives in the company’s history.

Iger first stepped down in 2020 after a 15-year run, handing the reins to Bob Chapek. That transition unraveled within two years amid internal tensions, strategic missteps, and declining morale, culminating in Chapek’s abrupt dismissal in late 2022 and Iger’s return.

That episode continues to loom large over Disney’s governance story. Analysts at Jefferies described the “impending leadership transition” as an “overhang on shares,” even as reports suggest a resolution is close. Bank of America analysts echoed that view, saying succession uncertainty has weighed on the stock in recent weeks.

Iger himself offered an unusually candid assessment on Monday’s earnings call, acknowledging that “trying to preserve the status quo was a mistake” when Chapek was appointed. He said that when he returned, there was “a tremendous amount that needed fixing,” from strategy and culture to cost discipline.

A stronger hand — but lingering questions

Iger struck a more optimistic tone about the state of the company he will leave behind, saying his successor would be “handed … a good hand in terms of the strength of the company,” alongside opportunities for growth and the need to keep evolving in a rapidly changing media landscape.

That comment reflects the paradox facing Disney investors. On one side, the company’s Experiences division has become a reliable earnings engine, providing cash flow stability and offsetting volatility in streaming and advertising. The division’s scale and profitability have elevated its strategic importance, making leadership continuity there especially critical.

On the other side, Disney is still navigating structural shifts in how audiences consume content, how streaming platforms are monetized, and how to balance creative ambition with financial discipline — challenges that will define the next CEO’s tenure.

Who could take the helm?

Among the leading internal candidates is Josh D’Amaro, chair of Disney Experiences, who has been widely credited with driving growth and operational discipline across parks and resorts. Industry insiders and Disney sources have previously told CNBC that D’Amaro is a top contender, particularly given the division’s growing contribution to earnings.

Dana Walden, Disney’s co-chair of Entertainment, is also seen as a serious candidate, bringing deep experience in television and content strategy at a time when Disney is reassessing its entertainment portfolio.

Bank of America analysts noted that, given the Experiences division’s outsized role in Disney’s profit base, appointing D’Amaro would likely be “well received by the investment community,” a signal that investors may favour operational certainty over broader strategic experimentation.

For now, Disney’s financial performance is doing its job: revenue is growing, parks are thriving, and expectations are exceeded. Yet the market’s restrained response suggests that investors are less focused on what Disney earned last quarter and more concerned with what comes next.

Until the board delivers clarity on succession and convinces investors that this transition will avoid the pitfalls of the last one, Disney shares may continue to trade with a leadership discount, even as the underlying business shows signs of renewed strength.