Palantir shares jump on upbeat revenue outlook as businesses adopt AI

(Reuters) - Palantir shares rallied over 18% in premarket trading after it forecast upbeat annual revenue fueled by strong demand for its software and data analytics services from businesses racing to adopt generative AI.

Palantir, which provides services to governments such as software that visualizes army positions, is set to gain about $35 billion in market capitalization, at current share price levels of $99.31.

"It's yet another company to be riding the AI wave, benefiting from multiple industries pressing the button on big investment to improve their technological capabilities," said Russ Mould, Investment Director at AJ Bell.

Co-founded by tech billionaire Peter Thiel, Palantir's platform AIP, which is used to test, debug code and evaluate AI-related scenarios, has benefited from businesses that are looking to deploy generative AI technology.

"Palantir is the Michael Jordan of AI stocks right now, not only capturing investors' imagination but delivering game-winning shots when it counts," said Matt Britzman, Senior Equity Analyst at Hargreaves Lansdown.

Meanwhile, the company's Chief Revenue Officer Ryan Taylor said they would discourage commercial clients from using DeepSeek's AI models, but if customers still choose to do so Palantir would continue to work with them.

White House press secretary Karoline Leavitt had said last week that U.S. officials were looking at the national security implications of DeepSeek.

With U.S. President Donald Trump imposing new tariffs, Taylor said it could also help drive demand for the company's analytics services centered around supply chain and logistics management.

At least nine analysts raised their price targets on the stock, according to data compiled by LSEG, while Morgan Stanley raised its rating to 'equalweight' from 'underweight' and sees Palantir as 'a powerful AI story'.

Palantir's 12-month forward price-to-earnings ratio stands at 160.93, compared to Snowflake's 181.89 and Datadog's 67.46.

(Reporting by Siddarth S in Bengaluru; Editing by Krishna Chandra Eluri)