Palantir stock slides amid AI rally cooldown

Palantir stock tumbles as broader AI sector loses momentum, despite strong earnings and a major defense contract.

Palantir Shares Slide as AI Rally Cools

Palantir Technologies’ stock fell 9% on Tuesday afternoon, trading around $157.91, marking a fifth straight session of losses and a roughly 15.5% slide since August 13. The pullback comes as other AI-linked giants such as NVIDIA and Meta retreat after earlier gains, while the Nasdaq dips about 1.4% at midday. Palantir had topped Wall Street estimates and lifted its full-year guidance earlier this month, highlighting early signs of demand for its analytics tools and a large Army contract as proof of longer-term opportunity.

In the same wave of investor caution, Citron Research published a short report arguing Palantir is overvalued, applying OpenAI’s widely cited valuation as a benchmark and suggesting Palantir could trade around $40 if that metric were used. The weekly price action follows a year that has left Palantir up roughly 110% from the start of the year, helped by growing AI tool adoption and a broader market rotation away from high-growth names amid questions about valuations.

The Palantir move underscores how quickly AI optimism can tilt market sentiment. A solid earnings beat can be overshadowed by a short-seller thesis and a broader rotation away from growth stocks. In markets like these, headlines from analysts and the pace of deal wins often carry more weight than revenue milestones.

Longer term, policy talks around AI infrastructure and defense-related demand could support Palantir's business. Yet investors still demand proof of durable growth and meaningful margins. The stock’s bounce will depend on whether fundamentals align with the narrative and whether next quarters deliver steady revenue growth rather than big surprises.

Highlights

The AI story remains unsettled as market mood tests the strength of long-term demand against short-term headlines.