Palantir Technologies Raises Revenue Forecast

(Reuters) – Palantir Technologies has raised its annual revenue forecast for the third time this year, driven by strong government spending and increasing business demand for its software services focused on generative AI technology.

Shares of Palantir rose approximately 8% in extended trading following this announcement.

The data analytics firm is capitalizing on the GenAI boom, with many companies utilizing its AI platform to test, debug code, and evaluate AI scenarios.

The updated forecast for 2024 revenue is now projected to be between $2.805 billion and $2.809 billion, an increase from the previous estimate of $2.742 billion to $2.750 billion.

Palantir has significantly benefited from the surge in AI-related stocks, with shares increasing over 140% this year. The company was added to the S&P 500 in September, outperforming the index's 20% year-to-date gain.

In addition, Palantir raised its forecast for adjusted income from operations to approximately $1.05 billion – $1.06 billion, compared to an earlier forecast of $966 million – $974 million.

"Top line growth, driven by demand for AI, is positively impacting profitability," stated CFO David Glazer.

While business adoption of Palantir's services is growing, a significant portion of its revenue still comes from government spending. Palantir reported a 40% increase in U.S. government revenue during the third quarter, representing over 44% of total sales, which amounted to $725.5 million. Analysts had expected revenue of $701.1 million on average, according to data compiled by LSEG.

Additionally, Palantir achieved its largest-ever profit, reporting a net income of $144 million for the third quarter, as noted by CEO Alex Karp in a shareholder letter.

However, a prominent Nordic investor, Storebrand Asset Management, recently divested its Palantir holdings amid concerns related to the company’s work for Israel and potential risks of violating international humanitarian law.

Looking ahead, the company has forecasted fourth-quarter revenue that is above existing estimates.