Palantir Technologies raised its annual revenue forecast for the second time this year on Monday, the latest sign that the generative AI boom is driving up demand for its software services from governments and corporate clients.

The data analytics company also forecast third-quarter sales above estimates and reported its largest ever quarterly profit, in the April-to-June period, CEO Alex Karp said in a letter to shareholders.

Its AI platform, used to test, debug code and evaluate AI-related scenarios, has enabled Palantir to tap into the surging demand for services that help companies develop generative AI technology.

The company co-founded by billionaire Peter Thiel now expects annual revenue between $2.74 billion and $2.75 billion, compared with $2.68 billion to $2.69 billion expected earlier. The forecast is above the estimate of $2.70 billion, according to LSEG data.

It also raised its annual revenue expectation from U.S.-based companies by $11 million, to $672 million.

Chief Revenue Officer Ryan Taylor told Reuters Palantir was driving growth by helping companies overcome "the huge bottleneck" between AI application prototypes and finished products that could be deployed to customers.

Palantir's shares, which have risen more than 39% in 2024, slipped nearly 9% last week after earnings reports from Big Tech firms such as Microsoft signaled that payoffs from huge AI bets could take longer to materialize than investors had initially hoped.

The company forecast third-quarter revenue between $697 million and $701 million, compared to analysts' average estimate of $679.1 million, according to LSEG data.

It has been working to reduce its dependence on government clients, which made up about 54% of total second-quarter sales.

"For the first time in our company's history, the trailing twelve-month revenue in our U.S. government business - including defense and intelligence agencies - surpassed $1 billion," CEO Karp said in a letter to shareholders.

Palantir, which works closely with governments to provide software to visualize army positions, among other services, recorded a 33% growth in revenue from companies in the reported quarter.

  - Reuters