Palantir shares rise as data analytics group forecasts strong AI demand

Investing.com -- Palantir (NYSE: PLTR) hiked its annual outlook and said it expected to remain profitable through the rest of the year, citing an expected boost from demand for its new artificial intelligence platform.

Shares in Palantir were up more than 15% in premarket trading.

The Denver-based big data analytics group known for its ties to government agencies said it now expects to post adjusted operating profit from operations of $506 million to $556 million in 2023, up from its prior estimate of $481M to $531M. Revenue is also seen at between $2.185B to $2.235B, above the previous guidance of $2.18B to $2.23B.

Driving the rosy expectations were Palantir's first-quarter results. The firm reported net income attributable to common shareholders of $16.80M in the first quarter, rebounding from a loss of $101.38M in the corresponding period last year.

Adjusted earnings per share of 5 cents also topped Bloomberg consensus forecasts of 3.8 cents a share. The beat on the bottom line was driven by new business wins, with commercial revenue up 5% year-over-year to $236M and government revenue up 20% annually to $289M. Customer count grew 41% year-over-year, with commercial customer count jumping 50% year-over-year to 155 customers.

In a statement, Co-founder and Chief Executive Officer Alex Karp predicted that the company would be profitable in each quarter until the end of 2023, saying that the "depth of engagement with" its new AI system will be "without precedent."

However, in a note to clients, analysts at Mizuho flagged that Palantir has provided few details about its plans to capitalize on so-called large language models, such as those that form the foundation of new technologies like ChatGPT.

"Moreover, as the [company] reallocates investments and resources to [its artificial intelligence platform], it remains to be seen what impact this may have on existing operations," the Mizuho analysts said.

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