(Bloomberg) -- Palantir Technologies Inc. rallied as much as 21% in premarket trading Tuesday after giving a strong earnings forecast and saying that demand for its new artificial intelligence tool due this month is “without precedent.”

The company posted a surprise profit in the first quarter and expects to stay in the black for the rest of 2023, which would be its first profitable year. But much of Palantir’s focus Monday was on AI. During a video call with analysts, Chief Executive Officer Alex Karp said the data analysis company is “running hard” at AI technology, and that its strategy “is to just take the whole market.” 

Palantir works with governments and corporations with sensitive networks, offering services to analyze information like criminal databases, DMV records or phone data to aid with decision making. “Every one of those clients needs an AI strategy,” Karp said. “We have unique software for that.” 

On Monday, the company said it expected adjusted income from operations to be between $506 million and $556 million in 2023. Analysts had projected $496.5 million.   

The company reported that revenue for the first quarter was $525 million, up 18% from last year. Analysts had expected $506 million. 

In a letter to shareholders, Karp stressed the importance of the company’s moves into AI. “We have already had hundreds of conversations with potential partners about deploying the software and are currently negotiating terms and pricing for access to the platform,” Karp wrote. 

But details of the plan are still being hammered out. On Monday’s call with analysts, he said, “We have no pricing strategy. We’re going to create a lot of value. We’re going to get hundreds of customers and we’re going to price it as we go.”

The CEO also warned that the risks presented by the latest and most advanced forms of generative AI are “real,” and said that Palantir designed its systems with privacy and human safety at the forefront. 

“The machine must remain subordinate to its creator,” Karp wrote in the shareholder letter.

Denver-based Palantir is known as much for its outspoken billionaire co-founder Peter Thiel as for its technology powering defense, health and other operations for the US and allied countries. Palantir’s software also aggregates and analyzes data for companies including Airbus SE and Merck & Co.

The company’s AI push leverages much of its previous work, and comes relatively late compared with some technology giants. The sector has become wildly popular over the past year, with major tech players promoting new offerings alongside startups bankrolled with billions of venture dollars. 

With Palantir’s tools, a military customer could theoretically ask the AI system about opposing forces, ask it to analyze information about those forces, and prompt it for suggestions about ways to target the opponent. Those options might range from jamming communications to launching missiles, according to a video demonstrating the platform. Palantir also offers AI computing at the edge, meaning it’s able to embed autonomous decision making on drones, aircrafts, ships, satellites and other endpoints. 

The first version of Palantir’s AI platform will be made available only to select customers this month, Karp said in the letter.

The company reported earnings per share of 1 cent in the first quarter. Analysts had expected a 1 cent loss for the period. 

Palantir’s revenue from its government business grew in the quarter. The revenue it took in from the US and other allies hit $289 million, about a 20% increase. That’s above analysts’ estimates of $285.6 million.

Palantir recently won deals with the US State Department to modernize data management for medical services and with the Australian government to investigate financial crimes. The company will also assist Ukraine’s prosecutor general with the investigation of alleged Russian war crimes. 

The company’s commercial business, which it has worked to expand in recent years, hit $236 million in revenue for the quarter. That’s about a 15% increase from the same period a year ago, exceeding analyst estimates of $219.8 million.

(Updates with premarket shares.)

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