Feb 6 Reuters Palantir Technologies shares surged nearly 20 on Tuesday, as the data analytics software maker39;s strong fourthquarter revenue growth led by increased demand for its AI offerings enthused investors.

Revenue from Palantir39;s commercial segment rose 32 yearoveryear to 284 million in the reported quarter, helping the company post 608 million in overall revenue which beat LSEG estimates.

The surge in demand for the Denver, Coloradobased company39;s AI platform helped offset concern about slowdown at its largest segment that serves the U.S. government due to uncertainty over timing of contracts.

The AI program, which was launched in April last year, is the future of Palantir, CEO Alex Karp said, banking on strong demand from U.S. companies.

Jefferies upgraded Palantir39;s shares to hold from underperform, reversing its rating in just a month saying we are impressed with AI Platform AIP ramping faster than our initial expectation.

Palantir also introduced an adjusted free cash flow forecast, targeting between 800 million and 1 billion in 2024, which Jefferies called the highlight of the report.

Despite the strong performance, analysts expressed concerns about lofty valuation of Palantir39;s shares, which have nearly doubled over the past 12 months.

Palantir39;s median pricetoearnings PE ratio is 53.19, well above the industry median at 17.60, according to LSEG data. A lower PE multiple indicates an attractive investment opportunity.

Given uneven…