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 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.

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.