Palantir raises annual revenue forecast on GenAI strength; shares surge

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By Arsheeya Bajwa (Reuters) -Palantir Technologies raised its annual revenue forecast for the second time this year on Monday, the latest sign that the generative AI boom is driving demand for its software services. Shares of the Denver, Colorado-based company rose more than 13% in extended trading, adding to a year-to-date gain of more than 39% as Wall Street made heavy bets on the future of generative artificial intelligence technology. The data analytics company also forecast third-quarter sales above estimates and reported its largest ever quarterly profit, in the April-to-June period, CEO Alex Karp said in a letter to shareholders. Its AI platform, used to test, debug code and evaluate AI-related scenarios, has enabled Palantir to tap into surging demand for services that help companies develop GenAI technology. The company co-founded by billionaire Peter Thiel now expects annual revenue between $2.74 billion and $2.75 billion, compared with $2.68 billion to $2.69 billion expected earlier. This is above the estimate of $2.70 billion, according to LSEG data. It also raised its annual revenue expectation from U.S.-based companies by $11 million, to $672 million. Chief Revenue Officer Ryan Taylor told Reuters Palantir was driving growth by helping companies overcome "the huge bottleneck" between AI application prototypes and finished products deployed to customers. Palantir's shares slipped nearly 9% last week after earnings reports from Big Tech firms such as Microsoft signaled that payoffs from huge AI bets could take longer to materialize than investors had initially hoped. The company forecast third-quarter revenue between $697 million and $701 million, compared to analysts' average estimate of $679.1 million, according to LSEG data. It has been working to reduce its dependence on government clients, which made up about 54% of total second-quarter sales. The U.S. commercial business, which grew 55% to $159 million, was the highlight for the quarter, D.A. Davidson managing director Gil Luria said. "Enterprise customers are increasingly selecting Palantir to help them find a path to leveraging artificial intelligence within their business," Luria said. The company recorded adjusted earnings of 9 cents per share in the second quarter, compared to an estimate of 8 cents per share. (Reporting by Arsheeya Bajwa in Bengaluru; Editing by Pooja Desai)