After a dramatic weekly rally, a caller on the August 11 episode of CNBC’s Mad Money pointed out the rapid trajectory of Palantir Technologies Inc. (NASDAQ:PLTR). The caller noted that the stock had jumped 44.1% in less than a week and appeared to face virtually no direct competition in its specialized enterprise software space. Jim Cramer responded:
I got to tell you, the litany is true. I have been saying that Palantir, remember, I was the guy who was on the hook for the $200 going to $250 but they’re making me proud, and are they my buddy, pal, friends? Probably not… I will say they had a great quarter and they deserve a little bit more. They deserve some of the love.
From Summer Patience to Full Conviction
Cramer’s bullish sentiment on August 11 was not a sudden pivot, but rather the culmination of a thesis he defended through summer market volatility. During the June 18 episode of Mad Money, when a caller asked whether to add to an early position after the stock was hit with heavy selling, Cramer advised separating short-term share price movements from its operational strength. He said:
Oh boy, let me think about this, let me think about this. I think it’s fine as long as you recognize, I just want to see what they’ve pushed it down to… yeah, I thought so, they really clubbed it today, as long as you recognize it as a long-term growth story. What’s happened is the growth wasn’t very exciting to people. The growth hasn’t slowed down, just the stock.
A few weeks later, during the July 1 episode, as software stocks faced broader selling pressure, Cramer singled out Palantir Technologies Inc. (NASDAQ:PLTR) as his top high-growth pick:
The only one right now that I actually trust is Palantir. This is the fastest grower of the stocks I follow, and it’s been crushed. It’s down 80 points from its high. Today, it finally showed some signs of life.
Record Q2 Results and Upgraded Guidance
Cramer’s multi-month patience was validated by Palantir Technologies Inc.’s (NASDAQ:PLTR) second-quarter financial results posted on August 3. The company delivered a clean top and bottom-line beat, posting adjusted non-GAAP EPS of $0.41, beating consensus by $0.06. Total revenue reached $1.94 billion, up 94% year-over-year and outperforming expectations by $130 million.
Domestic operations drove the surge, with U.S. revenue leaping 115% year-over-year to $1.573 billion. Within that total, U.S. commercial revenue surged 149% to $764 million, while U.S. government revenue grew 90% to $809 million. Driven by accelerating enterprise adoption, management raised full-year 2026 revenue guidance to between $8.150 billion and $8.158 billion, well above the $7.72 billion consensus. Full-year adjusted free cash flow expectations were also increased to between $4.5 billion and $4.7 billion.
Michael Burry Doubles Down on Bearish Bet
Despite the earnings blow-out, high-profile skeptics argue that valuation has reached extreme levels. The well-renowned investor Michael Burry recently doubled down on his bearish stance against Palantir Technologies Inc. (NASDAQ:PLTR), buying long-dated put options expiring in late 2026 and March 2027 with strike prices in the low $100s. Burry highlighted Palantir Technologies Inc.’s (NASDAQ:PLTR) high valuation.
Institutional Accumulation Counters Short-Side Skepticism
While prominent shorts like Burry warn of multiple compression, smart money continues building its presence in the enterprise AI leader. Palantir Technologies Inc. (NASDAQ:PLTR) was held by 96 hedge funds in Q1, as per Insider Monkey’s database, up from 89 funds in the prior quarter, showing growing conviction in the company’s competitive moat across commercial and defense channels. Arrowstreet Capital was the company’s most significant shareholder in the first quarter with over 10.4 million shares after increasing its stake in the company by 278%, sequentially.
At the same time, the short percentage of float for Palantir Technologies Inc. (NASDAQ:PLTR) sits at a modest 3.17%, which shows that despite a rich forward price-to-earnings ratio of over 112, suggesting that aggregate bearish positioning remains relatively limited.
Palantir Technologies Inc. (NASDAQ:PLTR) remains one of the most polarizing names in enterprise software. While a triple-digit forward multiple and high-profile short bets keep valuation risks front and center, increasing hedge fund ownership and accelerating commercial revenue offer a strong counterweight. If Palantir Technologies Inc. (NASDAQ:PLTR) continues converting enterprise AI demand into high-margin growth, it could keep validating Cramer’s bullish outlook over the bears.
While we acknowledge the risk and potential of PLTR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than PLTR and that has 10,000% upside potential, check out our report about this cheapest AI stock.
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