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.

If you've not kept close tabs on the AI industry's explosive growth, but the name still rings a bell, it might be because the U.S. Department of Health and Human Services asked Palantir for help managing the monumental task of combating the spread of the COVID-19 pandemic, including the distribution of coronavirus vaccines.

Palantir Technologies shares hit a new all-time high on Friday. The stock is capping an active week driven by a blockbuster Q2 earnings report that showcased explosive growth.