Palantir Technologies soared to a record high on Tuesday, with shares climbing as much as 27% after the Denver-based software company reported fourth-quarter earnings that beat Wall Street's targets and unveiled stronger-than-anticipated guidance for 2025. The surge follows a year-to-date gain of 36%, reflecting heightened investor enthusiasm for artificial intelligence-a key driver in Palantir's commercial and defense-related business lines.

The company posted adjusted fourth-quarter earnings of 14 cents per share on revenue of $828 million, surpassing analyst forecasts of 11 cents per share and $776 million in revenue, based on surveys from LSEG. Palantir also guided for first-quarter revenues between $858 million and $862 million, beating Wall Street's $799 million estimate. For the full year, the firm now projects sales of $3.74 billion to $3.76 billion, outstripping the consensus figure of $3.52 billion.

The strong quarterly performance builds on a broader rally that has seen Palantir's share price rocket by more than 340% in 2024. Demand for its AI software has soared amid rising corporate interest in analytics, data intelligence, and large-scale machine-learning solutions. "We are at the way beginning of our trajectory, we are at the way beginning of a revolution, and we plan to be a cornerstone, if not the cornerstone company, and driving this revolution in the U.S. over the next three to five years," said CEO and co-founder Alex Karp during the earnings call.

In a letter to shareholders, Karp wrote that the momentum within its commercial and government segments is "unlike anything that has come before." That momentum is illustrated by a 64% uptick in U.S. commercial revenue and a 45% climb in U.S. government sales. For 2025, Palantir expects a 54% increase in U.S. commercial revenue, reflecting continuous demand across industries.

Karp emphasized the company's focus on American national security. Palantir is ”very long America," he stated on the call, adding that Palantir aims to bolster the country's defensive capabilities to make the country “more lethal" in the face of global competition. His stance comes at a moment when the technology race-particularly in artificial intelligence-has intensified worldwide.

Shyam Sankar, Palantir's chief technology officer, reinforced that sense of urgency, remarking: "I think the real lesson, the more profound one, is that we are at war with China. We are in an AI arms race." Such language reflects growing anxiety in the defense sector, where private contractors and startups compete to offer advanced analytics platforms to the military.

Wall Street responded positively. Morgan Stanley upgraded Palantir to equal weight from underweight, citing the company's "accelerating fundamentals" and revising its price target to $95 from $60. Analyst Sanjit Singh wrote, "Given the strength of the outlook, we acknowledge that we were wrong about our core fundamental catalyst of slowing growth below the 30% level due to the tougher compares in 2025. This leaves us with valuation as the primary remaining concern." Bank of America's Mariana Perez Mora lifted her target to $125 from $90, citing Palantir's status as an "AI value adder."

Despite the bullish note, some analysts remain wary about how far this rally can stretch. Jefferies maintained an underperform rating, albeit raising its price target to $60 from $28, and noted it questions whether the lofty valuation is sustainable long term. While investor appetite for AI-related stocks has soared, the high-cost environment for developing advanced AI models has led to increased scrutiny from market observers.

The company's Q4 revenue saw 36% year-over-year growth, marking Palantir's sixth consecutive quarter of accelerating top-line expansion. It comes on the heels of last week's popularity surge for rival AI firm DeepSeek, which rattled investors by spotlighting the sector's ballooning research and computing expenses. Yet Palantir's leadership appears unshaken, doubling down on a multi-year strategy to embed its AI tools across both corporate and governmental client bases.