Palantir (PLTR) Grew 93% With a 62% Operating Margin. Is the “AI Sovereignty” Demand Real?

We just published the list of the 10 Best Meme Stocks to Invest In and Palantir ranked 7th on this list.

Nobody has to double their money every year to build real wealth. An investor who puts $10,000 into a stock that returns 15% annually and holds it for 40 years ends up with about $2.7 million. That takes patience, not a lucky guess.

Reaching for stocks that promise to multiply overnight makes that outcome less likely, not more, because a single collapse can wipe out years of compounding. That tension is the subject of our look at whether Sandisk can keep climbing after a 1,322% gain in a year.

Hedge funds work from the opposite instinct. On average, they don’t load up on lottery-ticket stocks. They back companies they judge most likely to deliver higher returns for an amount of risk they can live with.

5 Best "Moonshot" Tech Stocks to Buy According to Short Sellers

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Bubble Warnings Spread as Retail Traders Pull Back

Veteran voices are urging care. Yahoo Finance reported on October 9 that Bridgewater Associates’ Ray Dalio said the market is close to bubble territory. Panmure Liberum head market strategist Joachim Klement expects the AI bubble to burst in either 2027 or 2028, according to Bloomberg. Meanwhile, Bank of America Securities’ Jill Carey Hall wrote in a client note that retail clients were net buyers, the first retail inflows since late July.

Everyday traders have cooled off since then. Goldman Sachs strategist Ben Snider wrote in a note that retail trading volumes have fallen about 20% since mid-summer, and retail made up 9% of US equity volume, near its lowest level since 2020, according to Yahoo Finance on October 26. You might also be interested in reading our piece on whether Palantir can justify a multiple five times its sector’s.

The speculative money has not gone quiet, though. Snider’s note showed retail trading in leveraged index funds running at roughly double the pace of ordinary funds tracking the same indexes, and Robinhood data pointed to retail options trading nearly doubling over the past year.

Palantir chief executive Alex Karp said demand for AI sovereignty has been unleashed, and the second-quarter numbers gave him plenty to point to. Revenue rose 93% from a year earlier to $1.935 billion. US commercial sales grew 149%, to $764 million, and the value of US commercial contracts signed in the quarter was a record at $2.132 billion, up 153%.

Profits kept pace with sales. Adjusted operating margin reached 62%, up from 46% a year earlier. Palantir raised its full-year revenue forecast to between $8.150 billion and $8.158 billion, and it lifted its outlook for adjusted operating income and free cash flow too. The new free cash flow range is $4.5 billion to $4.7 billion.

Government work is speeding up too. US government revenue grew 90%, so both halves of the customer base, government and commercial, are moving together. Total contract value signed in the quarter climbed to $3.373 billion, up 49% from a year ago, which gives Palantir a bigger stack of booked work to deliver in the quarters ahead.

We recently weighed whether Palantir’s growth can justify its valuation.

This article is originally published at Insider Monkey.