Palantir's AI battlefield software fuels another surge in revenue expectations
Demand from governments and businesses pushed Palantir to another forecast increase, reinforcing its position as one of the biggest beneficiaries of the AI spending boom.
Palantir Technologies raised its annual revenue forecast for the second time this year on Monday, signaling continued strong demand from governments and businesses for its data analytics and artificial intelligence software. The upbeat outlook sent the company's shares up 14% in extended trading.
The Denver-based company has increasingly expanded beyond its traditional government business, marketing its defense-grade AI tools to commercial customers through its artificial intelligence platform, which helps organizations integrate and deploy AI systems.
"Our business is compounding at a rate and scale that we have never before witnessed," Palantir CEO Alex Karp said in a letter to shareholders.
Palantir now expects full-year revenue of between $8.15 billion and $8.158 billion, up from its previous forecast of $7.65 billion to $7.662 billion.
"Palantir has been the clearest counterexample to the claim that enterprise AI doesn't scale beyond pilots, and accelerating growth makes that increasingly difficult to argue," said Emarketer analyst Jacob Bourne.
The company's U.S. government business remains a major growth engine. Revenue from U.S. government customers surged 90% in the second quarter to $809 million, as geopolitical tensions and the changing nature of warfare drive demand for advanced defense technologies, including AI-powered battlefield software.
Palantir, which also has extensive deals in Israel, is among the companies benefiting from increased government investment in autonomous and AI-enabled defense systems. The company is working with Anduril to develop software capabilities for U.S. President Donald Trump's Golden Dome missile defense initiative, Reuters previously reported.
At the same time, Palantir continues to accelerate its commercial expansion. The company raised its forecast for U.S. commercial revenue to more than $3.424 billion, up from its previous estimate of $3.224 billion.
"The core of our business, in the United States, continues to expand at an unrelenting and breakneck pace," Karp said.
The company's rapid growth in the U.S. comes as it faces increasing scrutiny overseas. European governments have expressed growing concerns about dependence on American technology platforms, while competition from local AI companies and startups continues to intensify.
France's domestic intelligence agency DGSI will replace Palantir tools with products from French rival ChapsVision, French Prime Minister Sébastien Lecornu's office said in June. The company is also challenging a decision blocking its two-year, £50 million ($67.15 million) contract with London's Metropolitan Police.
Despite those challenges, some analysts believe Palantir's U.S. growth trajectory remains the key factor driving investor sentiment.
"Accelerated growth in the U.S. market is more important, more durable, and more likely to drive the stock higher," said Ryan Lee, senior vice president of product and strategy at Direxion.
Palantir shares have fallen sharply from their November record high as investors have raised concerns over the company's lofty valuation and increased scrutiny of its government contracts.
The company forecast third-quarter revenue of between $2.16 billion and $2.164 billion, above analysts' average estimate of $2 billion, according to LSEG data.
Second-quarter adjusted earnings came in at 41 cents per share, beating analysts' expectations of 35 cents. Revenue jumped 93% year over year to $1.94 billion, exceeding forecasts of $1.80 billion.
