Palantir Technologies (PLTR) stock rose 7% in premarket trading on Tuesday after it raised its annual revenue and profit forecast for the second time this year on Monday, the latest sign that the generative AI boom is driving demand for its software services.

Shares of the Denver, Colorado-based company rose more than 12% in extended trading, adding to a year-to-date gain of more than 39% on the back of a rally in AI-linked stocks.

The data analytics company also forecast third-quarter sales above estimates and reported its largest ever quarterly profit, in the April-to-June period, CEO Alex Karp said in a letter to shareholders.

Its AI platform, used to test, debug code and evaluate AI-related scenarios, has enabled Palantir to tap into surging demand for services that help companies develop GenAI technology.

The company co-founded by billionaire Peter Thiel now expects annual revenue between $2.74 billion and $2.75 billion, compared with $2.68 billion to $2.69 billion expected earlier. This is above the estimate of $2.70 billion, according to LSEG data.

It also raised its annual forecast for adjusted income from operations to between $966 million and $974 million, up from its earlier expectation of $868 million to $880 million.

The results also allayed some investors' concerns. Palantir's shares were down about 9% last week after Big Tech earnings such as those from Microsoft signaled that payoffs from huge AI bets could take longer to materialize than Wall Street had initially expected.

Chief Revenue Officer Ryan Taylor told Reuters Palantir was driving growth by helping companies overcome "the huge bottleneck" between AI application prototypes and finished products deployed to customers.

The company also forecast third-quarter revenue above estimates.

The US commercial business, which grew 55% to $159 million, was the highlight for the quarter, D.A. Davidson managing director Gil Luria said.

"Enterprise customers are increasingly selecting Palantir to help them find a path to leveraging artificial intelligence within their business," Luria said.

Palantir recorded adjusted earnings of 9 cents per share in the second quarter, compared to an estimate of 8 cents per share.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Pooja Desai)