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While shares of Palantir Technologies (PLTR -3%) were gaining decent momentum heading into the AI software developer's Q3 report last month, they have exploded since, nearly doubling in just over a month as several uplifting announcements and speculation fuel considerable appreciation. After Q3 earnings triggered a monster rally, additional kindling was provided after PLTR announced it would transfer its Class A common stock to the Nasdaq from the NYSE, anticipating eventually meeting the eligibility requirement of the Nasdaq-100 index. Following this development, PLTR stated that it was granted FedRAMP high baseline authorization, building on its previous moderate authorization.

News from today and Friday after the close had the stock pushing to record highs before profit-taking ensued. On Friday, PLTR and Anduril, a U.S. defense technology firm specializing in autonomous systems, primarily drones, announced the upcoming launch of a new consortium delivering AI infrastructure for the U.S. government. Then, primarily underpinning today's jump, PLTR announced an expansion of its U.S. Special Operations Command (USSOCOM) contract, a one-year delivery valued at just under $37 mln, putting PLTR as the lead software integrator for the Special Operations Command's Mission Command System.

• What makes PLTR's USSOCOM contract expansion so compelling today? Making PLTR the lead software integrator for the USSOCOM's Mission Command System and marking the first time the company is supporting U.S. Special Operations Forces (SOF) underscores increasing confidence in its AI software technology.
• The public sector contributes around half of PLTR's annual revenue, making it a critical component of its overall growth. U.S. government revenue growth accelerated tremendously in Q3 compared to the beginning of FY24, expanding at the quickest rate yr/yr in nearly four years, a testament to PLTR's Builder Bootcamps launched this year. Branching out within the U.S. government, where switching to competing software often occurs less frequently and slower than within the private sector, paves the way for further acceleration in subsequent quarters.
• The Anduril/Palantir partnership bolsters PLTR's reach and influence within the U.S. government. The partnership focuses on national security data, turning collected data created by sensors, vehicles, weapons, and robots (extracted by Anduril) into AI capabilities by leveraging PLTR's AI Platform (AIP). While financial details on the partnership were not disclosed, it has the capacity to extend to other industry partners, potentially providing additional streams of revenue down the road.

Following PLTR's Q3 results, we commented that without cracks in the unrelenting momentum of AI, the company remains in a sturdy position to extract further gains. Given the breathtaking rise since, profit-taking may be in the cards. PLTR's steady flow of promising announcements has yet to snap any current momentum. However, at a 172x forward earnings multiple and 74x forward sales valuation, somewhat reminiscent of where PLTR traded in early 2021, any minor hiccups could ignite heavy selling pressure.