Palantir Posts First-Ever Annual Profit, Huge AI Demand, Shares Jump 15%

DENVER – Palantir Technologies, the enigmatic data analytics company, announced its first ever annual profit, driven by soaring demand for its artificial intelligence capabilities from both government and commercial clients.

The company reported net income of $210 million for 2022, exceeding Wall Street expectations. It also issued a rosy profit forecast for 2024 of $834 to $850 million, well above analyst predictions. Palantir’s stock jumped over 15% in after-hours trading on the news.

“Our commercial business is exploding in a way we don’t know how to handle,” said Alex Karp, Palantir’s CEO, in an interview. “We don’t know what to do with the onslaught of demand.”

The results mark a major milestone for the secretive software firm co-founded in 2003 by Karp and billionaire tech investor Peter Thiel. After nearly two decades building customized data mining tools for government spy agencies and global banks, Palantir is now pivoting hard towards serving corporate customers hungry for the type of artificial intelligence capabilities that have long been the company’s specialty.

In the fourth quarter, Palantir’s revenue from US commercial clients soared 70% to $131 million. It signed 103 deals worth over $1 million in the quarter, more than double a year earlier. Deals exceeding $10 million quadrupled to 21.

“This is product driven,” said Karp. “We are now engaged on three fronts. We are proud of the role we’re playing on all three. I can’t say more.”

He was referring obliquely to Palantir’s work supporting the US and allied governments in global conflicts against rivals like China, Russia and Iran. The company has faced scrutiny over some controversial government deals, but Karp has made supporting Western allies’ defense and intelligence goals a core tenet of Palantir’s identity.

With brisk growth in the US private sector now added to its government backbone, Palantir finally attained overall profitability in 2022. Total revenue grew 23% to $2.2 billion. Government sales expanded 16% while commercial revenue surged 46%.

But the company’s expansion in Europe has been sluggish, prompting Karp to vent his frustrations with the continent’s lack of appetite for Palantir’s offerings.

“Europe has decided it’s not going to engage in this revolution around AI,” he told investors. We are shifting more of our resources to the US.” He revealed plans to transfer engineers from European hubs back to the US to meet ballooning demand.

Indeed, America’s newfound AI paranoia appears to be playing into Palantir’s hands. Alarm over China’s AI ascendancy is driving huge investment in AI by both the US government and corporations. Palantir is seizing the moment, reorienting from its niche roots serving spies and soldiers towards a broader ambition: becoming the West’s premier industrial AI powerhouse.

This pivot represents a validation of sorts for Palantir’s unorthodox culture, which has long drawn skepticism. Employees routinely describe Karp’s leadership style as messianic. He opens company meetings with meandering philosophical monologues. Job candidates are asked about their views on Sun Tzu and Roman imperial governance.

Despite the eccentricities, Palantir has nurtured a fanatical employee loyalty and zeal for its engineering mission. That now appears to be paying dividends as it races to capitalize on a new AI boom while other tech firms flounder.

Success has been a long time coming. For years, Palantir hemorrhaged money and struggled to expand beyond government clients. But 2022 seems to have been an inflection point. Major deals with the NHS in Britain and aerospace titan Airbus demonstrated new commercial traction.

The requisite soul-searching any new Palantir engineer must complete has lately tilted from “how to serve democracy” towards “how to serve capital”. Karp is fine with that trade-off if it ensures Palantir emerges on top in the AI race against China.

Not everyone is convinced. In Europe, Palantir’s NHS deal sparked unease about relying on an American spy-tech firm for public infrastructure. Some technologists question whether Palantir’s government-centric DNA is suited for business contexts.

But with momentum now firmly on its side, few are betting against Palantir anymore. Its enigmatic founders have long envisioned their company as a technology pillar upholding Western liberal values. That vision seemed fanciful for many years. But as AI takes center stage geopolitically, Palantir finally appears poised to fulfill its world-historical aspirations – and make a lot of money along the way.