Nov 3 (Reuters) - Palantir Technologies ( PLTR )

forecast fourth-quarter revenue above analysts' estimates on

Monday, as the rapid adoption of artificial intelligence boosts

demand for its data analytics services from businesses and

governments.

The defense contractor raised its annual sales target for

the third time this year, amid strong sales for its services

that ease the transition to the complex, data-intensive

technology.

Palantir ( PLTR ), co-founded by tech billionaire Peter Thiel,

expects fourth-quarter sales of between $1.327 billion and

$1.331 billion, compared with analysts' average estimate of

$1.19 billion, according to data compiled by LSEG.

The company also raised its annual sales forecast to a range

of $4.396 billion to $4.40 billion, from its earlier

expectations of between $4.142 billion and $4.15 billion.

Palantir ( PLTR ) last month announced a deal with Nvidia ( NVDA ) to

use the AI chip leader's processors and software to help its

customers speed up decision making in complex fields.

It now expects sales to U.S. businesses to exceed $1.43

billion this year, up from the $1.30 billion it forecast

earlier.

The results come at a crucial moment as big-ticket spending

on AI expansion and sky-rocketing market valuations have sparked

concerns of an "AI bubble".

Palantir's ( PLTR ) shares have more than doubled in value this year,

outpacing the gains in the world's most valuable firm - Nvidia ( NVDA ) -

and the benchmark S&P 500 Index.

The stock trades at a whopping 12-month-forward

price-to-earnings ratio of 246.2, compared with Wall Street

darling Nvidia's ( NVDA ) 33.3, according to LSEG data.

Palantir's ( PLTR ) results have also been buoyed by expectations of

increased defense spending on its military-grade AI tools.

The company, initially backed by the CIA, is benefiting from

a shift in the Pentagon's software-buying process towards

commercial providers under President Donald Trump.

Palantir ( PLTR ) reported revenue of $1.18 billion for the quarter

ended September 30, beating estimates of $1.09 billion. Adjusted

per share earnings of 21 cents also beat estimates of 17 cents.