Palantir alleviates apprehensions about defense spending by enhancing revenue expectations
Rewritten Article:
Palantir, the data intelligence powerhouse, shrugged off worries about potential cuts in U.S. defense spending, skyrocketing its 2025 forecast after announcing quarterly results that surpassed estimates. The company bumped up its revenue growth prediction for the year to a whopping 36%, far exceeding Wall Street's expectations of a 31% increase.
The Denver-based company reported first-quarter revenue of $884 million, up an impressive 39% from the previous year, but just 2% ahead of analyst projections. Net income more than doubled from a year ago to $214 million, surpassing the market's expectation by one-fifth.
The surge in demand for Palantir's AI-driven software underpinned these impressive results. Investors have backed the company, propelling its share price to record highs above $120 this year, up from less than $30 in mid-2023.
On May 2, shares hit their second-highest closing level on record at $124.28, valuing the company at nearly $300 billion. However, they slipped 0.4% during regular trading and fell more than 9% after-hours following the quarterly results.
CEO Alex Karp praised the "ferocious" revenue growth in the first three months of the year, claiming it was "unparalleled" for a company of Palantir's size. In his quarterly letter to shareholders, Karp attributed the results to the rapid adoption of large language models by industries and governments.
Launched in 2003 by tech visionaries like Peter Thiel, Palantir's chair, and Karp, the company provides software to governments, militaries, and companies for data analysis and intelligence production. The U.S. government is its largest customer, but Palantir's commercial sector has been rapidly expanding, particularly since the launch of its "Artificial Intelligence Platform" in April 2023.
Concerns about US defense spending cuts have affected the company, causing share price fluctuations this year. Nevertheless, Defense Secretary Pete Hegseth proposed cutting more than $5 billion in "non-essential" contracts in April. However, the Trump administration also proposed increasing the Pentagon's budget by 13% in 2026 to focus on AI and other vital areas.
According to Palantir, revenues from U.S. government contracts surged 45% to $373 million in the first quarter of 2025, exceeding analyst expectations of $358 million. The company also won contracts worth $30 million with US Immigration and Customs Enforcement for immigrant surveillance and $178 million with the US Army to develop AI-enabled military trucks.
Commercial revenue from U.S. customers skyrocketed 71% to $255 million. The gain in commercial contracts prompted Palantir to boost its revenue outlook for the year to a range of $3.89 billion to $3.902 billion, up from $3.741 billion to $3.757 billion three months ago.
In his quarterly letter, Karp noted that Palantir's efforts to arm the U.S. and ensure its defense and intelligence agencies had cutting-edge software, once dismissed as politically risky, now seem to be gaining traction within Silicon Valley.
- The increased demand for Palantir's artificial-intelligence driven software, a key element of its technology, has significantly contributed to its impressive business growth and financially surpassing estimates.
- Investors, drawn by the company's promising future in technology and investing, have backed Palantir, with its share price in the business sector reaching record highs this year.
- The Trump administration's proposed 13% increase in Pentagon's budget for 2026, with a focus on artificial intelligence and other vital areas, indicates a positive outlook for Palantir's business in the defense sector.
