Data analytics firm Palantir Technologies forecasted fourth-quarter revenue above market estimates on Thursday, betting on strong demand for its new artificial intelligence platform from clients, including U.S. government agencies. The Colorado-based company’s shares were up nearly 13% in premarket trading.
The company’s sales have been rising rapidly since it unveiled a new product called the Artificial Intelligence Platform last month. That software lets businesses and defense and military organizations tap large language models and AI to help inform decision-making. Analysts say the technology could be a game-changer in the way companies manage information and in the decisions they make.
Founded in 2003, Palantir has been an early mover in big data and machine-learning technologies. Its new product — a scalable platform that enables users to access and analyze massive amounts of information — has already been adopted by dozens of customers, including many U.S. government agencies, said Wedbush Securities analyst Dan Ives.
Its latest results show that it is achieving its goal of turning its business into a profitable enterprise. It reported a first-quarter profit of $31 million in the U.S., its second consecutive quarter of positive net income after years of losses. Revenue climbed to $558 million, a 17% increase over the same period last year.
Palantir’s CEO, Alex Karp, has gone on a media blitz in recent months, boasting that the company is seeing strong demand for its AI tools from both government and commercial markets. It has also been hosting “AI boot camps,” where prospective customers can use the tools for one to five days.
A growing number of companies are deploying AI systems to help sift through the massive amount of digital data being generated each day. Companies produce more than 200 million emails each minute, and the world’s mobile devices send out more than 2.5 billion texts daily. Some analysts believe that the potential for AI will eventually create a market worth trillions of dollars.
However, many questions still need to be answered about how ethically the industry will use the power of such systems to extract and analyze the information. Many fear that malicious actors could use the technology to do harm or entrap people or even by governments for surveillance and other purposes.
While investors are bullish about the prospects for AI, Palantir will need to prove it can translate its success in the government sector into growth in the commercial space if it is to become a true leader in the field. It will also have to juggle a series of events that could impact its business, such as the expiration of its IPO lockup, which will let insiders sell some of their stock, and its decision on whether to buy back more shares. The company’s following earnings report is due in mid-February. PLTR is a member of the Reuters Newswire service. This story was originally published by Reuters and is reproduced here with permission. Copyright 2022 Reuters. All rights reserved.