Shares of Palantir Technologies Inc. rose about 13% in premarket trading on Tuesday.
Palantir on Monday raised its annual revenue forecast for the third time, betting on strong spending from governments and rising demand for its software services from businesses looking to adopt generative AI technology.
Palantir has benefited from a boom in GenAI technology, as more companies turn to its AI platform, which is used to test, debug code and evaluate AI-related scenarios.
The company now expects 2024 revenue in a range of $2.805 billion to $2.809 billion, up from its prior expectation of $2.742 billion to $2.750 billion.
The company is among the largest beneficiaries of a rally in AI-linked stocks, with its shares up more than 140% so far this year. It was added to the S&P 500 in September and has outperformed the index's 20% year-to-date gain.
It also raised its annual forecast range for adjusted income from operations to between about $1.05 billion and $1.06 billion. It earlier forecast $966 million to $974 million.
"Top line growth, which is driven by the demand for AI, (is) flowing through to the bottom line," CFO David Glazer told Reuters.
While businesses are increasingly using Palantir's services, a large chunk of its revenue comes from government spending.
Palantir, whose services include providing software to governments that visualizes army positions, posted a 40% rise in U.S. government revenue in the third quarter, which made up more than 44% of total sales of $725.5 million.
Still, Palantir's commercial business, which includes sales to businesses will likely overtake the government business as early as next year, said Gil Luria, head of technology research at D.A. Davidson.