Why Palantir Stock's Run May Not Stop Just Yet

Core Insights - Palantir Technologies has experienced significant stock rallies, with gains exceeding 50% in under two months during notable years like 2020 and 2024, and over 30% during previous uptrends in 2023 and 2024, indicating potential for future growth [1] Financial Performance - In Q2 2025, U.S. commercial revenue surged by 93% to $306 million, driven by AI platform adoption [4] - The company secured a $10 billion contract with the U.S. Army in July 2025, boosting government revenue by 49% in Q2 2025 [4] - Palantir recorded GAAP operating income of $269 million in Q2 2025, demonstrating steady profitability [4] - Revenue growth stands at 38.8% for the last twelve months (LTM) and an average of 25.7% over the past three years [4] - The company has a free cash flow margin of almost 49.7% and an operating margin of 16.6% LTM [4] - Palantir shares have a P/E ratio of 586.2, indicating a high valuation compared to the S&P [4] Market Performance and Risks - During the Covid pandemic, Palantir's stock declined approximately 22.5% from peak to trough, and during the inflation crisis, it dropped around 85%, highlighting vulnerability during market volatility [5] - The stock can also decline in favorable market conditions due to factors like earnings reports and business changes, suggesting that past performance does not guarantee future stability [6] Investment Strategy - The Trefis High Quality (HQ) Portfolio, which includes Palantir, has consistently outperformed its benchmarks, including the S&P 500, S&P mid-cap, and Russell 2000 indices, indicating a strategy that combines superior returns with reduced risk [7]