Unlock the Editor’s Digest for free
Roula Khalaf, Editor of the FT, selects her favourite stories in this weekly newsletter.
Data intelligence group Palantir shook off concerns that US defence spending cuts could harm its sales of military software to the federal government, boosting its 2025 outlook after reporting forecast-beating results.
The Denver, Colorado-based company lifted its revenue growth guidance for the year to 36 per cent, surpassing Wall Street’s expectation for a 31 per cent increase, and boosted its outlook for several other financial metrics.
This followed a first quarter in which the group reported a 39 per cent year-on-year jump in revenues to $884mn, while net income more than doubled from 12 months ago to $214mn.
Chief executive Alex Karp described the revenue growth in the first three months of the year as “ferocious” and claimed it was “unparalleled” for a company of Palantir’s size.
“We believe our results are indicative of a revolution sweeping across our business and industry,” he said, citing the rapid adoption of large language models by industry and governments,” Karp said on Monday in his quarterly letter to shareholders.
Launched in 2003 by technology entrepreneurs including Peter Thiel, its chair, and Karp, Palantir supplies software to governments, militaries and companies for collating, analysing and producing intelligence from large data sets.
The US government is its largest customer, but Palantir’s commercial unit has been growing rapidly, particularly since it launched its new “Artificial Intelligence Platform” in April 2023.
Palantir’s share price has surged from less than $30 per share in mid-2023 to near-record highs above $120 thanks to strong demand for its AI-powered software. Its shares were down more than 8 per cent in after-hours trading on Monday, having closed on May 2 at $124.28, a level that was their second-highest on record and valued the group at almost $300bn.
Concerns about US defence spending cuts have weighed on the company, though, and spurred share price fluctuations this year. Defense secretary Pete Hegseth said in April he would cut more than $5bn in “non-essential” contracts, but the Trump administration has also proposed increasing the Pentagon’s budget by 13 per cent in 2026 to spend more on areas like AI.
Palantir said on Monday that revenues from US government contracts jumped 45 per cent to $373mn in the first three months of 2025, surpassing analyst expectations of $358mn.
The company was recently awarded a $30mn contract with US Immigration and Customs Enforcement to surveil immigrants and won a $178mn contract with the US Army in March to develop AI-enabled military trucks.
Meanwhile, commercial revenue from US customers soared 71 per cent to $255mn. Commercial contract gains prompted Palantir to increase its revenue outlook for the year to a range of $3.89bn to $3.902bn from $3.741bn to $3.757bn three months ago.
Karp said in his quarterly letter that Palantir’s interest in arming the US and ensuring the country’s defence and intelligence agencies had access to better software than those of its adversaries “was for years dismissed as politically fraught and ill-advised”.
“We, the heretics, this motley band of characters, were cast out and nearly discarded by Silicon Valley. And yet there are signs that some within the Valley have now turned a corner and begun following our lead.”
