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Shares of Palantir Technologies rose as much as 15 percent in after-hours trading on Monday, as Peter Thiel's data analytics group reported record quarterly profits and raised its revenue forecast amid high demand for its artificial intelligence software.
Palantir shares have risen 140 percent this yr and have a market value of around $60 billion. That means it now trades at greater than 100 times future earnings, making it the most costly software stock available on the market.
The Denver-based company said Monday that third-quarter revenue rose 30 percent to $725.5 million, well above the $703.7 million forecast by analysts. Net profit rose to a record $144 million.
U.S. business revenue rose 54 percent to $179 million, while U.S. government revenue increased 40 percent to $320 million.
Palantir was founded in 2003 by technology investors including Thiel and Alex Karp, its chief executive, to supply data management and analytics to the U.S. federal intelligence community. Its AI software is now utilized by global organizations similar to energy giant BP and Britain's National Health Service, although its biggest customer stays the US government.
The group has change into the poster child of the AI investor craze in addition to a so-called meme stock amongst retail investors who follow Karp's proclamations about patriotism and national defense. The share price was further boosted by its inclusion within the S&P 500 in September.
“Our company’s growth is accelerating and our financial performance is exceeding expectations as we meet continued demand (for AI tools),” Karp wrote to shareholders on Monday. “The world is within the midst of a U.S.-driven AI revolution that’s transforming industries and economies, and we’re at the middle.”
Wall Street has grown cautious about Palantir's lofty valuation, which has given the corporate a much higher premium than other AI boom-benefiting tech firms similar to Oracle and Microsoft, which trade at lower than 30 percent of earnings. “We cannot explain why Palantir is the most costly name in software,” RBC analysts wrote in a note last week.
The company said in March that interest in its latest AI tools — which help businesses, government and military customers analyze data and use it to make decisions — had reached unprecedented levels, attracting major latest customers, including CBS Broadcasting and General Mills.
On Monday, Palantir raised its 2024 revenue forecast to about $2.81 billion, beating analysts' expectations of $2.76 billion. Sales from the US business business will increase by greater than 50 percent this yr to over 687 million US dollars.
