Shares of Palantir Technologies (PLTR) rose sharply midday Tuesday after the company reported a blockbuster second quarter, sending its market cap to $413 billion.
That move added fuel to the fire for two already red-hot leveraged exchange-traded funds: the GraniteShares 2x Long PLTR Daily ETF (PTIR) and the Direxion Daily PLTR Bull 2X Shares (PLTU). Both funds surged on the day and remain the top-performing U.S.-listed ETFs of the year. Each has more than tripled in value year to date, beyond Palantir’s 131% gain.
Palantir’s revenue increased 48% year over year to $1.01 billion in Q2, marking the fastest growth rate in four years and surpassing analyst estimates of $939 million. Full-year guidance of $4.15 billion also topped expectations of $3.91 billion.
“This was a phenomenal quarter. We continue to see the astonishing impact of AI leverage,” said CEO Alex Karp in a statement.
Invest in Gold
Palantir, long known for its government and defense contracts, is rapidly expanding into the commercial sector. U.S. commercial revenue surged 93% in the quarter to $306 million, outpacing U.S. government revenue, which rose 53% to $426 million.
The company appears to be benefiting from its position at the intersection of two key growth themes: artificial intelligence and national defense. With the adoption of artificial intelligence accelerating and military spending on the rise globally, Palantir’s product suite has struck a chord with both enterprises and governments.
But the biggest criticism of the stock remains its valuation. Palantir trades at 86x forward revenue estimates, the highest multiple among its software peers. On the earnings side, the numbers are even more extreme: 241x forward adjusted earnings and 371x forward GAAP earnings.
Those sky-high multiples require near-flawless execution, something skeptics remain wary of.
Of the 31 analysts tracked by Bloomberg, only 10 rate the stock a buy, while 17 have a hold and 4 recommend selling. The average 12-month price target is $142, well below the current share price of $175.
Jefferies analysts, who have an underperform rating and a $60 price target, praised the quarter but cautioned that the stock’s valuation is “on a different planet.”
For now, though, investors—especially retail traders—seem unfazed. And leveraged ETF holders are reaping the rewards. PTIR and PLTU now manage nearly $700 million and $600 million in assets, respectively, fueled by both performance gains and continued inflows.