(Reuters) -Palantir Technologies forecast fourth-quarter revenue above analysts' estimates on Monday, as the rapid adoption of artificial intelligence boosts demand for its data analytics services from
businesses and governments.
Shares of the company gained about 2% in extended trading.
The defense contractor raised its annual sales target for the third time this year, amid strong sales for its services that ease the transition to the complex, data-intensive technology.
Palantir, co-founded by tech billionaire Peter Thiel, expects fourth-quarter sales of between $1.327 billion and $1.331 billion, compared with analysts' average estimate of $1.19 billion, according to data compiled by LSEG.
The company also raised its annual sales forecast to a range of $4.396 billion to $4.40 billion, from its earlier expectations of between $4.142 billion and $4.15 billion.
Palantir last month announced a deal with Nvidia to use the AI chip leader's processors and software to help its customers speed up decision making in complex fields.
It now expects sales to U.S. businesses to exceed $1.43 billion this year, up from the $1.30 billion it forecast earlier.
The results come at a crucial moment as big-ticket spending on AI expansion and sky-rocketing market valuations have sparked concerns of an "AI bubble".
Palantir's shares have more than doubled in value this year, outpacing the gains in the world's most valuable firm - Nvidia - and the benchmark S&P 500 Index.
The stock trades at a whopping 12-month-forward price-to-earnings ratio of 246.2, compared with Wall Street darling Nvidia's 33.3, according to LSEG data.
Palantir's results have also been buoyed by expectations of increased defense spending on its military-grade AI tools.
The company, initially backed by the CIA, is benefiting from a shift in the Pentagon's software-buying process towards commercial providers under President Donald Trump.
Palantir reported revenue of $1.18 billion for the quarter ended September 30, beating estimates of $1.09 billion. Adjusted per share earnings of 21 cents also beat estimates of 17 cents.
(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)
