Palantir Shares rose 23% on Tuesday, heading for a record close after the data analytics software maker reported solid third-quarter results and gave upbeat revenue guidance.

The stock reached a high of $51.19, above the previous record of $45.14 set last week. If the advance continues, it would be the stock's strongest rise since February 6, when the stock gained 30%.

LSEG said revenue rose 30% year-over-year to $726 million, beating the average analyst estimate of $701 million. Adjusted earnings per share of 10 cents beat the average estimate of 9 cents.

Analysts at Deutsche Bank said in a report that “the hit was driven by better-than-expected performance from the U.S. government,” boosted by demand for artificial intelligence tools.

“Palantir is among the few infrastructure software companies that have begun to meaningfully monetize generative AI, with its competitive position benefiting from long-standing investments and deep expertise in complex data integration and, in particular, its reputation for data security built into its ontology,” the analysts said wrote.

Net income was $143.5 million, or 6 cents per share, up from $71.5 million, or 3 cents per share, in the year-ago quarter. The company forecast fourth-quarter revenue of $767 million to $771 million. Analysts polled by LSEG had expected $741.4 million.

Palantir is targeting U.S. commercial sales of more than $687 million for the year, representing about 24% of total revenue.

Bank of America increased its price target to $55 from $50 and maintained its Buy rating.

“We continue to see adoption of PLTR’s AI-enabled products and reach in its early stages as more companies realize the potential time, resource and cost savings,” Bank of America analysts wrote in a note to investors. “In our view, Palantir’s lead as a differentiated, agnostic AI enabler only grows with each new use case that increases the economics of the unit.”

—CNBC's Jordan Novet and Michael Bloom contributed to this report.