(Reuters) -Palantir Technologies ( PLTR ) on Monday raised its forecast for annual revenue for the second time this year, expecting robust demand for its artificial intelligence-linked services from businesses and governments.

The data analytics and defense software firm projected revenue in the range of $4.14 billion to $4.15 billion for 2025, up from its earlier forecast of between $3.89 billion and $3.90 billion.

The raised forecast is also above analysts' average estimate of $3.90 billion, according to data compiled by LSEG.

Palantir ( PLTR ), which was initially backed by the CIA, has capitalized on its expertise in managing and analyzing data to help train and run new AI apps using its platforms.

Shares of the Denver, Colorado-based company rose more than 2% in extended trading.

Its shares have more than doubled in value this year, far outpacing the 6% gain for the benchmark S&P 500, as investors bet on its ability to benefit from the proliferation of AI technology and government spending on defense tech.

Palantir ( PLTR ), co-founded by tech billionaire Peter Thiel, said it now expects revenue derived from U.S. businesses to come in above $1.30 billion, up from its earlier guidance of more than $1.18 billion.

They nearly doubled to $306 million in the June quarter. The business is closely watched as the company works to cut its reliance on government contracts.

Sales to the U.S. government jumped 53% to $426 million, representing more than 42% of total second-quarter revenue of about $1 billion, which beat estimates.

Last week, the U.S. Army said it might purchase services of up to $10 billion from Palantir ( PLTR ) over a decade.

Palantir ( PLTR ) also forecast third-quarter sales above estimates.

The company's second-quarter adjusted earnings of 16 cents per share beat estimates of 14 cents.

(Reporting by Arsheeya Bajwa in Bengaluru; Editing by Sriraj Kalluvila)