Palantir Technologies (PLTR), the data analytics software developer, has seen a 62% share rise in the first quarter of this year. The tech company’s stock rose after fourth-quarter earnings met Wall Street estimates, while revenue exceeded targets. Management reports that its Artificial Intelligence Platform (AIP), introduced early last year, has been popular with commercial users. Other reasons for the spark of interest in Palantir include its new Army contract and forecasted generative AI growth in the U.S., despite coming up against some headwinds in Europe.   

New Army Contract May Have Been a Contributing Factor

The U.S. Army has awarded Palantir a $178 million contract to design and develop TITAN (Tactical Intelligence Targeting Access Node) ground systems. It uses AI and ML (machine learning) to enhance its automated geolocation and target recognition. The system aggregates data from space, high-altitude, aerial, and terrestrial sensors for precision targeting and other planning operations on the battlefield.

Growth in AI Operations Poised to Continue Firm’s Rise

Palantir transitioned into generative AI after OpenAI’s rollout but its AIP, which integrates generative AI training modules with the company’s existing software, has enjoyed a robust uptake among its U.S. customers. The situation in Europe (18.5% of the company’s revenue) is more complex. The EU passed the Artificial Intelligence Act in December, which imposes requirements on AI users and developers that would impact Palantir’s European operations. Although the law has yet to take effect, it could make doing AI-related business more difficult.

What’s Next for Palantir?

Palantir plans to focus, for now, on the U.S. commercial market and AI-related offerings. They serve government agencies, banks, financial service firms, hedge funds, and corporate clients. The company forecasts 40% revenue growth in that market, between $2.652 billion and $2.668 billion, significantly above estimates. PLTR has an Accumulation/Distribution Rating of A-minus.

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