Palantir Technologies Inc reached a new all-time high after a 5% surge following U.S. missile strikes in Iran. The stock has increased over 48% in the last three months, driven by the anticipated long-term demand for Palantir’s AI software platform, AIP. The company’s growth is evident both in government and commercial sectors, attributed to AIP boot camps that attract numerous new customers. Recently, the company announced 139 deals valued between $1 million and $10 million, reflecting its strong cash flow, absence of debt, and high net dollar retention of 124%.

However, as Palantir's stock nears its ATH, concerns about its valuation arise. Despite the strong fundamentals, justifying the current stock price remains challenging. Investors tend to pay a premium for tech stocks, but comparisons to giants like Amazon show the difficulty in achieving massive valuations quickly. Palantir supporters view AIP as a transformative product, similar to AWS for Amazon.

Geopolitical factors, like U.S. involvement in the Middle East, underscore Palantir's relevance. Its technology plays a crucial role in future warfare scenarios, supporting its bull case. Despite varied opinions about the company, its integration with the U.S. government, notably the DoD, bolsters the case for holding the stock.

Despite the recent rally, the lack of trading volume raises questions about its sustainability. The stock might retract to more stable levels, providing more opportune entry points for long-term investors. Current trading volume is below average, underscoring potential weaknesses in the rally's foundation.

Options trading around Palantir reflects this caution. Rising call volume at certain strike prices indicates short-term bullish sentiment, yet declining implied volatility suggests that significant price movements aren't expected. For long-term investors, the disparity between price action and investor conviction advises caution, while traders might find short-term opportunities if trading volume increases.