Palantir Technologies shares surged more than 27% Tuesday, trading at $159.74 as of 11:49 a.m. Eastern time, after the AI software company posted second-quarter results that far exceeded Wall Street expectations and sharply raised its full-year revenue guidance, marking the stock's best single-day gain in more than a year.

The rally, which pushed shares up as much as 27.13% during Tuesday's session, reversed a stretch of declines for Palantir earlier this year tied to broader investor anxiety over the sustainability of AI-related spending across the technology sector.

A quarter Karp called 'otherworldly'

Palantir reported second-quarter revenue of $1.94 billion, up 93% from roughly $1 billion a year earlier and well ahead of analyst estimates of $1.8 billion, according to data compiled by LSEG. Adjusted earnings per share came in at 41 cents, comfortably topping Wall Street's expectation of 35 cents. Net income roughly tripled during the quarter, with Palantir crossing $1 billion in quarterly profit for the first time in the company's history.

Chief Executive Alex Karp did not hold back in describing the results. "This quarter was otherworldly," Karp said in a statement, pointing to the company's surging commercial business and describing rising demand for what he called AI sovereignty, the ability of companies and governments to keep their data private from major AI developers, as a defining driver of the quarter's performance.

Commercial and government revenue both surge

Palantir's U.S. commercial revenue jumped 149% year-over-year to $764 million, while U.S. government revenue........

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