Palantir Technologies Inc. (PLTR.US) reported second-quarter sales that significantly exceeded Wall Street expectations, prompting the company to raise its full-year revenue and profit forecasts. The firm specifically described commercial demand as "extraordinary."

According to the financial report, Palantir generated revenue of $19.4 billion, a 94.0% year-over-year increase, beating estimates by $130 million. Adjusted earnings per share came in at $0.41, surpassing projections by $0.06. Palantir now expects full-year adjusted operating profit to be between $48.9 billion and $49.1 billion, up from the previous forecast ceiling of $44.5 billion. The software developer and major military supplier anticipates full-year sales of up to $81.6 billion, exceeding the market's average estimate of roughly $77 billion.

Where to begin

Palantir CEO Alex Karp said U.S. commercial sales in the second quarter were "stunning," surging 149% year-over-year to $764 million, far above the analyst consensus of $716.4 million. The stronger outlook helps allay investor concerns that AI developers like Anthropic PBC selling their own software, or governments outside the U.S. increasingly favoring domestic tech companies, could hurt Palantir's business. In a letter to investors on Monday, Karp pushed back against worries that upstart AI firms could displace the company, highlighting the risks of "letting models run amok internally."

Palantir shares rose as much as 14% in after-hours trading to $142.91. The stock closed Monday at $125.65. "This quarter was nothing short of extraordinary," said Karp. "Such an achievement would be amazing for any company; for one of our scale, size, and importance, it is simply remarkable."

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Originally known as a secretive Silicon Valley startup, Palantir sold custom data analytics software to the U.S. government and allied military forces. Since President Donald Trump took office, Karp, CTO Shyam Sankar, and other company leaders have increasingly cultivated a pro-American image, publishing books on the need for the tech sector to re-engage with the defense industrial base and speaking at conferences on AI's role in warfare. Foreign governments have taken notice. While Palantir's U.S. government business remains strong, European leaders have called for a growing need to have domestic tech companies provide software for national security and critical operations. In recent months, officials in France and the UK have moved to terminate contracts with Palantir due to concerns over technological sovereignty.

During a conference call with analysts on Monday, Karp remarked, "Sometimes we make decisions that go against our own economic interests, like supporting a lot of institutions in Europe. Growth there is just terrible." Palantir's international sales rose 33% year-over-year to $362.5 million. Meanwhile, U.S. revenue surged 115% to $1.57 billion.

In both the investor letter and the analyst call, Karp positioned Palantir's software as an alternative to working directly with AI companies that develop large language models (LLMs). He praised Palantir's clients for refusing to become "vassal states of language labs," positioning his company as a service provider that "allows you to swap models at any time." CFO Dave Glazer told analysts on the call that Palantir's adjusted gross margin was 86% in the previous quarter, down slightly from the prior three months, due to the company absorbing cloud hosting costs for a government client. He warned that spending would increase in the third quarter, partly due to seasonal hiring of new employees and other product and marketing activities.