Compared to most investors, I hold a more bearish view on Palantir (NYSE:PLTR) stock. Due to its high valuation, and concerns over possible slowing growth, down the road this popular big data play may be at risk of a major correction. Yet, given two factors currently in play, these issues could continue to stay on the back burner.

First, its meme stock status. As this status still holds, it stands to rally further. Not only that, this trend itself could give its underlying business an unexpected boost. Second, the transitory inflation narrative. As this view remains the consensus, fears of interest rate hikes will likely stay low. This will help prevent any valuation contraction among “story stocks” like this one.

So far, both factors have enabled it to bounce back. After falling below $20 per share, Palantir today changes hands for around $27 per share. Based on its stock price trajectory, a move back above $30 per share looks to be on the horizon. A move to (or near) its high water mark of $45 per share may be attainable as well.

That’s not to say it’s a less risky stock than it was before. Today’s sentiments could turn on a dime, sending shares on a double-digit percentage selloff. But, cautiously positioned, this may make for a solid vehicle to play current investing trends, before they change.

PLTR Stock: Meme Stock Status May Help in More Ways

Sure, Palantir’s booming prospects have played a role in the success of its stock this year. But, chances are its gains wouldn’t have been so massive if it wasn’t a favorite of Reddit’s r/WallStreetBets community. The enthusiasm for it cooled a bit in the spring. But, in the past month, it’s come back in a big way.

That’s not all. Its popularity among retail traders could be helping it out in more ways than one. I’m talking about recent statements from its COO, Shyam Sankar, who said the popularity of PLTR stock has helped sales. The company is best known for its sales to the U.S. federal government. But, it’s been looking to the private sector to help it sustain its high rate of revenue growth.

A longstanding concern has been the company’s ability to expand its commercial unit in line with investor expectations. Yet, if Sankar’s statements are not an exaggeration, and the company’s meme stock status is having a synergistic effect in helping it grow its business, concerns over its long-term growth runway may prove overblown.

Instead, as the company looks even more set to continue expanding at a 30%+ clip, its rich valuation may not be under threat. Coupled with cooling concerns about rising inflation leading to rising interest rates, and in turn, valuation contraction, PLTR stock could remain on the upward trajectory it’s been on since mid-May.

Near-Term Correction Risk Is Low if  Narrative Holds

Recently, I included Palantir among several tech stocks that could continue to gain if the transitory inflation narrative stays in place. A few times this year, worries about the increase in cost of goods and services has left investors jittery about possible inflation, and a sharp increase in interest rates.

So far, the Federal Reserve has downplayed these concerns by calling today’s inflation “transitory,” a product of the reopening following the pandemic. Over the past month, market participants have taken this view as well. This, on top of its meme stock popularity, enabled PLTR stock to sustain its rich valuation.

A few months from now, we’ll get a better idea whether today’s inflation is temporary or more akin to the inflation issues of decades past. But, in the near term, assuming the Fed isn’t forced to change its tune, this narrative will likely remain. Despite Palantir’s forward price-to-earnings, or P/E, ratio of 187.5x, a correction on valuation concerns could be minimal.

Again, keep in mind this is only a short-term, not a long-term, forecast. If it becomes definite its growth train is slowing down? Investors will likely reassess this stock’s valuation, and not in a good way.

Risk-Hungry Investors Stand to Profit in Near Term

The long-term bull case remains shaky. With so much of its future growth already priced-in, it’s still at risk of eventually correcting. At the very least, PLTR stock could reach a point where it treads water, and grows into its valuation.

The near term, though, still looks good for PLTR stock. With the meme stock phenomenon, and the transitory inflation narratives still at play, this popular stock may have a shot of retracing its high water mark. Just exercise some caution, as a reversal in sentiment could be painful.

On the date of publication, Thomas Niel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Thomas Niel, a contributor for InvestorPlace.com, has been writing single-stock analysis for web-based publications since 2016.