What happened

Shares of Palantir (PLTR 1.29%) are posting strong gains again in Tuesday's daily trading session. The data analytics software company's share price was up 7.3% as of 1:45 p.m. ET, according to data from S&P Global Market Intelligence. Meanwhile, the S&P 500 index was down roughly 0.6%, and the even more growth-heavy Nasdaq Composite index was down roughly 0.8%. 

Ark Invest, which is led by CEO Cathie Wood, published updates on its website yesterday revealing that it had once again increased its holdings in Palantir stock in its exchange-traded funds (ETFs). After an extremely turbulent stretch of trading last year, the types of growth stocks favored by Wood have seen some strong rebound momentum this year, and the trend has increased the market's interest in investment moves made by her company. 

So what

Despite growth stocks generally facing selling pressures on Tuesday, Palantir is recording another day of big share-price gains. The stock has been enjoying a strong rally following its better-than-expected first-quarter results and some signs of mounting institutional support. The latest endorsement from Cathie Wood appears to be playing a driving role in today's momentum. 

On Monday, Ark Invest disclosed that it had purchased 243,158 shares of Palantir stock for its Ark Innovation ETF, 54,250 shares for its Ark Fintech ETF, and 42,162 shares for its Ark Next Generation ETF. Altogether, the purchase amounted to roughly $4 million based on yesterday's stock prices. 

While the investment from Wood doesn't look huge compared to the total equity holdings in Ark's exchange-traded funds, her company has now added Palantir shares for three weeks in a row. It seems clear that the famous investor is warming up to the data software stock. 

Now what

With today's rally, Palantir stock is now up roughly 96% year to date. In addition to growth stocks generally enjoying recovery momentum, the company's better-than-expected first-quarter results, guidance for generally accepted accounting principles (GAAP) profitability in each quarter this year, and growth opportunities in artificial intelligence have helped power explosive gains for the company's share price. 

While Palantir's impressive rally could continue, investors should approach the stock with the understanding that it remains a risky and somewhat speculative growth play. With a market cap of roughly $26.8 billion, the software company is valued at approximately 59 times expected earnings and 12 times expected sales.