While the operational momentum is clearly solid, investors should pay closer attention to the risks. History shows Palantir stock can fall hard as sentiment shifts.

Palantir's stock is rallying after another excellent quarter. The company's sales hit $1 billion in the second quarter and profits more than doubled. Its valuation has eclipsed that of many blue-chip stocks.

There's a big hurdle standing in the way of continued increases in the stock price. If you bought $10,000 of Palantir (NASDAQ: PLTR) stock in 2020 when shares first hit the public market, you'd have close to $187,