Palantir stock (NASDAQ: PLTR) took a sharp hit on Wednesday, falling about 7% as high-valuation tech stocks pulled back across the market.
The AI and data analytics company had hit record highs earlier in the month, but its recent surge quickly gave way to a consolidation, wiping out some of the big gains driven by optimism around its AI projects and government contracts.
Palantir stock slid from a peak near $190 to close around $146, leaving investors who had ridden the rally this year a bit shaken.
Palantir stock: Sixth straight day of losses
The drop on August 20 was Palantir’s sixth straight day of losses, pushing the stock down about 20% from its all-time high just over a week ago.
The slide reflects a shift in sentiment, as the early excitement around generative AI investments begins to cool.
Even with the pullback, Palantir is still one of the S&P 500’s best-performing stocks in 2025, up more than 100% year-to-date, a reminder of just how remarkable its rally has been, even amid ongoing volatility.
Palantir’s results tell a bit of a mixed story. The company just had its first $1 billion revenue quarter, helped by bigger contracts with US government agencies and more companies picking up its AI analytics tools.
On the flip side, growth from commercial clients hasn’t fully met expectations, and investors are wondering if Palantir can keep the momentum going with such a high valuation.
Palantir stock now trades at a forward P/E of nearly 488, which is huge compared with tech giants like Microsoft and Apple, where it’s closer to 30.
What analysts say?
Analysts watching Palantir’s recent stock drop are mixing caution with a bit of optimism. Many see the pullback as a natural cooldown after an incredible rally fueled by generative AI excitement and big government contract wins.
But worries remain about how the company’s high valuation lines up with its actual earnings and cash flow.
One market observer pointed out that, while Palantir has landed some major government deals, especially under reforms from the Trump administration, its commercial business still has work to do to show steady growth.
The concern is that the excitement around AI-driven growth might be getting ahead of how quickly Palantir can actually turn its technology into broader market revenue.
Short sellers from Citron Research are skeptical about how much higher Palantir’s stock can go, warning of a possible “AI bubble” that could pop, much like previous tech hype cycles. Tech insiders have echoed this, pointing to high valuations and speculative trading in AI-related stocks.
On the technical side, Palantir is nearing key support levels, including the 50-day moving average. A clear break below that could trigger a longer sell-off.
Some analysts say the stock needs to find a stable footing around these levels before it can start climbing again and give investors more confidence.
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