AI Stocks Surge as Companies Prove Ability to Scale Profitably

A quartet of high-conviction AI trades is gaining momentum as several companies demonstrate their ability to scale AI software with extraordinary profitability. Palantir (PLTR) reported a quarter that reconciled its valuation with growth, with revenue up 93% and operating margins at 62%. The company's AIP platform and Ontology layer provide the secure operating system that enterprises need to connect interchangeable foundation models with proprietary data and real-world workflows.

The technical picture confirms this fundamental re-rating: PLTR has retaken its 200-day moving average after falling below it in early 2026. This is not a dead-cat bounce, but rather the beginning of a sustained fundamental re-rating. Caterpillar (CAT) also reported strong results, with revenue up 24% to a record $20.5 billion and power-generation demand exploding 72%. The company has locked in physical AI buildout through the end of the decade.

DigitalOcean (DOCN) saw its AI customer ARR surge to $234 million, with inference services growing nearly 800%. Token consumption jumped 30-fold in 60 days, confirming the Jevons paradox: cheaper inference is triggering an explosion in usage. Zebra Technologies (ZBRA) upgraded its AI leadership and broke above multiple moving averages.