Palantir Technologies: Riding the AI Volatility Roller Coaster

The Ferrari World theme park opened in Abu Dhabi in November 2010. Its centerpiece, Formula Rossa, holds the Guinness record as the fastest roller-coaster launch on Earth. Using a hydraulic catapult similar to those that launch fighter jets from aircraft carriers, the ride accelerates riders to 240 km/h (about 149 mph) in under five seconds, reaching 100 km/h within the first two seconds. At that speed, even airborne dust feels like a bullet. Riders wear goggles, stow all belongings, and board a train shaped like a Formula 1 car. The experience lasts roughly a minute—more than enough time, in my view.

Owning an AI software stock like Palantir (PLTR) this year is the closest equivalent to Formula Rossa without traveling to Yas Island. The shares carry a beta of 1.6, moving 60% more than the broader market in both directions. Yet beta barely captures the volatility. Over the last five years, the annualized standard deviation is 71%, several times the market norm. The five-year maximum drawdown is 85%, and the stock is now just a few percentage points from a record high. I mention this to caution anyone who dislikes roller coasters: this may not be the ride for you. Not everyone disembarking, dazed by their on-ride photo, agrees the thrills justified the chills. Below, we tell the story and show the charts. Palantir returned to our Best Stocks list last week, and we have not yet featured it in this column. Sean covers the fundamentals; I will follow with the technicals and our invalidation levels.

Best Stock Spotlight: Palantir Technologies, Inc. (PLTR)

Sean — Palantir was an original holding in Porterhouse, our in-house momentum strategy launched in January. The model exited at the April rebalance and had not returned—until last week, when it appeared on our Best Stocks list, prompting this spotlight. PLTR closed at a record $207.18 last November, then fell 48% to a June low near $107 amid a broad software selloff. It nearly doubled to a new record close of $209.05 on October 9. As of Wednesday’s close, the stock is up 13% year-to-date and 55% over the past three months.

Palantir builds software that enables governments and large enterprises to run operations on their own data and AI models. The company began with U.S. defense and intelligence agencies and is rapidly expanding its commercial footprint. Private corporations are now its fastest-growing customer segment.

The business did not slow during the “SaaSpocalypse.” Revenue growth has accelerated for nine consecutive quarters, from 27% in Q2 2024 to 93% in Q2 2026, on $1.94 billion in revenue. U.S. commercial revenue grew 149%, while U.S. government revenue rose 90%. Net dollar retention reached 157%, meaning existing customers are spending 57% more than a year ago. Net income exceeded $1 billion in a single quarter for the first time. That pairing of growth and profitability is reflected in the widely cited “Rule of 40,” which adds revenue growth to profit margin; anything above 40 indicates a healthy software company. Palantir’s score was 155 in Q2, based on a 62% adjusted operating margin, marking the 12th straight quarter of improvement. By comparison, Microsoft scores about 66, and CrowdStrike—at a similar revenue scale—scores around 45. The only large companies ahead of Palantir are Micron (427), SK Hynix (333), and Samsung (182).

Management has raised 2026 revenue guidance at every print this year, lifting the outlook from $7.19 billion (61% growth) in February to $8.15 billion (82% growth) in August. Q3 guidance implies 83% growth, and the company reports on November 2. The backlog supports that trajectory: total remaining deal value stands at $13.1 billion, up 83%. In September, Palantir expanded its partnership with Nvidia to pair Nvidia’s open models with Palantir’s platform, allowing customers to run AI on their own data and retain the models they train. Nvidia uses the same setup for its own supply chains.

None of this comes cheap. Investors are paying a premium for growth. At a $483 billion market cap, Palantir trades at 59x this year’s revenue guidance and roughly 78x consensus 2027 earnings. The stock has returned to its November level, but quarterly revenue is 64% higher than it was then, making it cheaper today than at its last all-time high.

Josh — Palantir gapped out of a base on August 4, opening near $145 after closing in the mid-$120s the prior session. The stock had spent most of 2026 below its 200-day moving average and bottomed in the low $100s in late June. This was a breakaway gap on the heaviest volume of the year, driven by the Q2 results Sean described. The gap has never been filled, and the September pullback found buyers at $166 on two occasions, nowhere near the gap. The stock cleared the $195 ceiling from late September on October 8, took out last November’s record the next day, and ran to a high near $213 on Monday. Wednesday’s 4% decline left it at $201, and it opened soft this morning around $195. Meanwhile, the 50-day moving average is rising at $181, and the 200-day sits at $153. Monday’s high is the level to clear.

RSI remained elevated for weeks after the August gap while the stock held. September then flushed it into the low 40s on the pullback to $166—a full reset that cleared the path for this second leg. The October 9 push to the record returned RSI to the low 70s. With RSI at 63 after Wednesday’s drop, momentum has cooled by nearly ten points in a single session. A single red day from a record high is a minor dent next to that September flush, and the current reading leaves room for another run at Monday’s high without starting from an overextended level.

Traders should not treat $195 as a stop. Because the stock is opening right on top of it, it is the battle line, not a stop-loss. Traders can use $185 as a stop—a 5% drop from current levels. That marks the floor of the late September and early October consolidation, where buyers held the stock between $185 and $187 for two weeks before the breakout. A close below $185 returns the stock to that range and signals the breakout failed. If you are wrong, you will know quickly, and it will not cost much to find out. Let the closing print decide, not intraday noise.

Investors can anchor to $166, where both September lows formed. The gap near $145 and the 200-day at $153 sit well below, making $166 the line for patient holders. A weekly close below $166 breaks the sequence of higher lows established since the gap.

Put your goggles on if you are playing. You have my permission to skip and get in the churro line instead.

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