In this month's list of new buys by the best mutual funds, top money managers scooped up $964 million worth of Palantir Technologies. Boosted by that demand and impressive growth, Palantir stock just broke out to an all-time high. Already on the IBD 50, IBD Big Cap 20 and IBD Sector Leaders, the artificial intelligence powerhouse also just got upgraded on Tuesday to an official spot onto IBD Leaderboard.
While Palantir earns the highest-possible 99 Composite Rating, investors should not ignore a word of caution regarding the stock chart of the artificial intelligence powerhouse.
Why Palantir Shines On Wall Street's Radar
From defense, intelligence and health care to data protection and financial services and beyond, Palantir develops AI-infused software platforms to help clients manage the complexities and threats of today's world.
Strong and steady growth has fueled the stock's price performance. According to Investor's Business Daily's Stock Checkup, Palantir has generated average earnings growth of 108% over the last three years. The AI leader has driven average earnings growth of 60% over the last three quarters, including a 63% gain to 13 cents per share in the first quarter. For the full year, analysts forecast a 42% year-over-year increase to 58 cents per share.
On the sales front, Palantir has posted seven quarters of rising revenue. In the first quarter, the company posted 39% sales growth to $883.9 million.
In addition to demand among the top-performing money managers, Palantir stock also sports a 1.4 up/down volume ratio and a B+ Accumulation/Distribution Rating.
Top Funds Make Mad Dash For These 9 Stocks — Plus Palantir
Palantir Stock Breaks Out In Volatile Market
With first quarter earnings now behind it, Palantir stock just cleared a 125.25 buy point. In the final hour of trading, the stock is up over 8%. Volume is above average and rising. The stock remains within the buy zone, which extends to 131.51.
Showing growing technical strength, the 21-day exponential moving average has bounced back above the 50-day line, which has also turned upward. Palantir's relative strength line trades right around a 52-week high, earning a blue dot in MarketSurge.
But as shares soar, investors should take note of two factors that call attention to the principles of risk management.
First, Palantir's new cup with handle is a later-stage base. While the stock stands poised to keep rising, such setups entail more risk than first- or second-stage patterns.
Second, the daily chart does not really show tight trading. The volatility shown in Palantir stock reflects market swings caused by President Donald Trump's tariff turbulence.
So while Palantir approaches a record high and a new breakout, investors should heed rules for both how to buys stocks and when to sell stocks.
View More Palantir Stock News And Analysis
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
