Josh Brown says this is his AI roller coaster stock
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(This is The Best Stocks in the Market , brought to you by Josh Brown and Sean Russo of Ritholtz Wealth Management.) Josh — The Ferrari World theme park opened its doors in Abu Dhabi in November 2010. The centerpiece of the park is Formula Rossa, which Guinness verified this spring as the fastest roller coaster launch ride on planet Earth. It employs a hydraulic launcher similar to the one used to catapult fighter jets off the top of an aircraft carrier. Your body is sent into a 240 km per hour (about 149 mph) rush in under 5 seconds when the ride takes off, and it hits 100 km per hour within the opening 2 seconds. At that speed, even ordinary dust in the air hits the skin like a bullet. Riders are made to wear eye goggles and leave anything they're carrying behind before boarding the train, which is shaped like an actual F1 car. The ride lasts about a minute, but that sounds like plenty of time to me. Riding an AI software stock like Palantir (PLTR) this year is the closest you'll get to the Formula Rossa experience without traveling to Yas Island. It has a beta of 1.6, meaning the shares move 60% more than the stock market, which works in both directions. But even beta understates how extreme the ride has been. Over the last five years the annualized standard deviation is 71%, several times what the broader market runs. The five-year max drawdown is 85%, and yet the stock is now just a few percentage points away from a record high. I point this out to warn you that if roller coasters aren't your thing, you may want to sit this one out. Not everybody getting off the ride, stumbling to see their picture on the wall, agrees that the thrills were worth the chills. We're going to tell you the story and show you the charts regardless. Palantir has just hit our list again as of last week and we haven't covered it yet in this column. Sean has the fundamentals below. I'll be back with the technicals and where we'd be wrong. Best Stock Spotlight: Palantir Technologies, Inc. (PLTR) Sean — Palantir was one of the original holdings when we launched Porterhouse, our in-house momentum strategy, in January. The model sold it at our April rebalance and it has not made its way back. However, just last week it popped up on our Best Stocks list, so we thought it would be a fun spotlight. PLTR closed at a record $207.18 last November, then fell 48% to a June low near $107 as all of software sold off. It then nearly doubled to a new record close of $209.05 on Oct. 9. As of Wednesday's close, it's up 13% YTD and up 55% over the last three months. Palantir builds software that lets governments and large companies run their operations on their own data and AI models. It started with U.S. defense and intelligence agencies and today the company is quickly expanding its commercial business. Private corporations have become the fastest-growing business for PLTR. Let's dive in. The business never slowed down during the "SaaSpocalypse." Revenue growth has accelerated for nine straight quarters, from 27% in Q2 2024 to 93% in Q2 2026, on $1.94B of revenue. U.S. commercial grew 149% and U.S. government grew 90%. Net dollar retention hit 157%, which means existing customers are spending 57% more than a year ago. Net income topped $1B in a quarter for the first time. That combination of growth and margin shows up in the oft-talked-about "Rule of 40," which adds revenue growth to profit margin. Anything above 40 is considered a healthy software company. Palantir's score was 155 in Q2, using its 62% adjusted operating margin, and it was the 12th straight quarter that score improved. Microsoft scores about 66, and CrowdStrike, at a similar revenue size, scores about 45. The only large companies ahead of PLTR are Micron (427), SK Hynix (333), Samsung (182). Management has raised 2026 revenue guidance at every print this year. It went from $7.19B (61% growth) in February to $8.15B (82% growth) in August. Q3 guidance implies 83% growth, and the company reports on November 2. The backlog backs that up - total remaining deal value is $13.1 billion, up 83%. In September, Palantir expanded its partnership with Nvidia to pair Nvidia's open models with Palantir's platform, which lets customers run AI on their own data and keep the models they train. Nvidia is using that setup for its own supply chains. None of this is cheap. Investors are paying up for growth. At a $483B market cap, Palantir trades at 59x this year's revenue guidance and about 78x consensus 2027 earnings. The stock is back where it was last November, but quarterly revenue is 64% higher than it was then. This makes it a cheaper stock today than it was the last time it hit an all-time high. Risk management Josh — Palantir gapped out of a base on Aug. 4, opening near $145 after closing in the mid-120s the session before. The stock had spent most of 2026 under its 200-day and bottomed in the low $100s in late June. This is a breakaway gap on the heaviest volume of the year, and the Q2 report Sean described above is the reason. Institutions paid up and weren't willing to wait. The gap has never been filled, and the September pullback found buyers at $166 twice, nowhere near it. The stock cleared the $195 ceiling from late September on Oct. 8, then took out last November's record the next day and ran to a high near $213 on Monday. Wednesday's 4% drop left it at $201, and it's opening soft this morning at around $195. Meanwhile, we have the 50-day rising at $181 and the 200-day at $153. Monday's high is the ceiling to clear. RSI stayed elevated for weeks after the August gap and the stock held. September then flushed it into the low 40s on the pullback to $166, a full reset that cleared the way for this second leg. The Oct. 9 push to the record took RSI back into the low 70s. With RSI at 63 after Wednesday's drop, momentum has cooled by nearly ten points in a single session. One red day from a record high is a small dent next to that September flush, and the reading leaves room for another run at Monday's high without starting from a stretched level. Traders can't use $195 here. The stock is opening right on top of it, so it's not a stop, it's the battle. Traders can use $185 as their stop, a 5% drop from here. That's the floor of the late September and early October consolidation, where buyers held the stock between $185 and $187 for two weeks before it broke out. A close below it puts the stock back inside that range and tells you the breakout didn't take. If you're wrong, you'll know fast, and it won't cost you much to find out. Let the closing print decide, not the intraday noise. Investors can anchor to $166, where both September lows came in. The gap near $145 and the 200-day at $153 sit well below that, which makes $166 the line for patient holders. A weekly close below it and the sequence of higher lows since the gap is broken. Put your goggles on if you're playing. You have my permission to skip and get in the churro line instead. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, or its parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL'S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.