Palantir bet on software that allows companies to deploy large language models in a practical sense, and management says that's paying off big time.
Palantir Technologies Inc. blew expectations out of the water with its latest forecast Monday, setting up the stock to further its explosive rally.
The software company forecast revenue of $3.741 billion to $3.757 billion for the full year, above the $3.503 billion that analysts tracked by FactSet were modeling. For the current quarter, Palantir (PLTR) expects $858 million to $862 million in revenue, whereas analysts had been projecting $799 million.
The outlook reflects an expectation for continued momentum in the company's U.S. business, which grew 52% in the latest quarter relative to a year earlier. It was also up 12% on a sequential basis to $558 million.
Palantir shares were up 20% in premarket trading Tuesday after rising nearly 400% over the past year.
Chief Executive Alex Karp said in the shareholder letter that "the momentum we are seeing across sectors, both commercial and government, is unlike anything that has come before."
For some time now, Palantir executives have been vocal that the company's software occupied a more valuable spot in the ecosystem than large language models did because companies need tools that put those models to work. Management said that trend played out in the latest results.
The company is focused on "actually deploying these models in an enterprise seamlessly to have a real impact," Chief Revenue Officer Ryan Taylor told MarketWatch.
Karp added in an interview that a recent highlight for Palantir has been "getting to humiliate all the people who said large language models are the end state, not the resource that needs to be processed." The company focused on managing LLMs while other companies emphasized building them, he said.
Now after DeepSeek, more people on Wall Street are coming around to the ideas that LLMs might be a commodity.
In the fourth quarter, Palantir generated $828 million in revenue, up 36% from a year before and ahead of the $776 million that analysts were modeling. Palantir said that U.S. growth is running far faster than growth in many continental European markets.
"We have the products and reach of an established incumbent andthe speed, growth and agility of an insurgent startup," Karp said in the shareholder letter.
Palantir also posted a profit beat, with adjusted earnings per share of 14 cents, versus the 11-cent consensus view. "We're continuing to be more efficient and using AI within the company," Chief Financial Officer David Glazer said. The profit performance also partly reflects the upbeat revenue momentum given that Palantir has been disciplined on operating expenses.