Palantir's (PLTR) big bets on artificial intelligence (AI) may be in the early stages of paying off. The data services company, which was co-founded by tech visionary Peter Thiel, CEO Alex Karp, and others, is rolling out a new, AI-focused service platform.

According to comments from management, the early demand outlook has been incredibly encouraging, and investors are clearly excited. Spurred by better-than-expected first-quarter results and excitement surrounding the company's opportunity in AI, Palantir stock is up roughly 24% following its Q1 release and conference call. Is this run just getting started?

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Peter Thiel's AI vision is closer to becoming reality

Peter Thiel has been one of the most vocal, visible advocates for the potentials of artificial intelligence technologies. While many companies are now rushing to participate in the AI revolution, it's something that's always been at the center of Palantir's long-term growth strategy. Thiel is chairman of the company's board of directors and has served in the role since the company's founding in 2003. 

In addition to co-founding Palantir, Thiel founded PayPal, formerly serving as its CEO, and was also one of the first investors in Facebook, now known as Meta Platforms. If Palantir's AI vision comes to fruition, it would represent another huge win for the technology magnate.

As of the company's last public filing, Thiel owned 6.5% of the Palantir's Class A shares, 31.3% of its Class B shares, and 33.3% of its Class C shares. In total, the company co-founder controlled 11.5% of total voting rights at the company. Only CEO Alex Karp has a greater individual share of the company's voting rights, coming in at 12.5%. 

Palantir is incredibly confident in its AI position

At the end of April, Palantir revealed Artificial Intelligence Platform (AIP) -- a service for military, governmental, and commercial applications. The software is on track to be released this month, and it could be a game changer for the company. 

CEO Alex Karp and other executives were on the company's Q1 earnings call. Karp stated that the demand for AIP is like nothing he's seen in his 20 years of working with Palantir. He added that his company had already had hundreds of conversations with potential customers about terms and pricing for components of the platform.

According to Palantir COO Shyam Sankar, the chief data officer of a large insurance company demoed AIP and said it was years ahead of anything they had seen. In this case, a prerelease version of Palantir's AIP was used to build an AI-powered virtual agent to automate claims processing.

From Palantir's recent earnings call, the company appears adamant in its belief that its strengths in AI are being underestimated. Responding to questions about Palantir's outlook and strategies in artificial intelligence, Sankar said, "I think it's not actually clear from the outside how far ahead we are."

Is the market still underestimating Palantir?

Palantir reported significant sales and earnings beats in Q1, and the company is guiding for profitability on a generally accepted accounting principles (GAAP) basis throughout the remainder of the year. The stock saw an explosive pop following the earnings beat and enthusiastic guidance, but the data software specialist's share price is still down 75% from the high it hit in January 2021.

According to Karp, Palantir is positioned to seize on an absolutely massive opportunity in AI. Here's the CEO describing how his company is approaching the artificial intelligence market on the first-quarter call:

No, our basic -- it's counterintuitive, but we're going to -- within the context of remaining profitable, our strategy on AI is to just to take the whole market. We have no pricing strategy. We're going to create a lot of value.

We're going to get hundreds of customers, and we will price it as we go. One of the things we've seen over and over again is when you're ahead of the market, you need to take territory.

It would be an understatement to say that Karp is confident in his company's position in AI. He also said on the company's recent Q1 call: "No one else knows, no one believes it, but they're about to find out. And so, we don't have to have this debate with people."

If Karp is right about the business's strengths in artificial intelligence, he and co-founder Peter Thiel could see incredible gains on their equity positions. There's no doubt that Palantir is a high-risk, high-reward stock, but it's one worth watching for investors who are interested in the unfolding AI revolution.