Palantir (PLTR) stock closed down for the sixth consecutive trading session as part of an extended decline driven by several factors:

• Overvaluation Concerns: The sell-off followed criticism from high-profile short seller Andrew Left of Citron Research, who argued that Palantir’s valuation had become “detached from fundamentals” and that the stock should be worth closer to $40—far below its recent highs near $190. Citron’s report compared Palantir unfavorably to OpenAI in terms of price-to-sales multiples.
• Profit-Taking and Momentum: After a rapid run-up on strong earnings and guidance that pushed the stock to record levels, investors have begun to take profits. Technical indicators like bearish relative strength and increased trading volume also suggest heightened selling pressure.
• Macro & Sector Pressures: Palantir’s decline has been exacerbated by a broader tech sell-off amid worries about inflation and slowing economic growth. Earnings announcements from major retailers like Target and Home Depot have highlighted inflationary pressures, further spooking tech investors.
• AI Sector Skepticism: New data from MIT revealed that most businesses investing in AI see little or no returns so far, adding skepticism about Palantir’s continued rapid growth.
• Insider Selling & Government Spending Uncertainty: Palantir CEO Alex Karp’s plans to sell up to $1.2 billion in shares by September added unease. Additionally, potential cuts to the U.S. military budget under the Trump administration have raised questions, since over half of Palantir’s revenue depends on government contracts. Louie DiPalma, William Blair’s industrials analyst, highlighted this risk in a recent Market Domination segment, noting the uncertainty around future government spending and how mixed signals from Washington create volatility for Palantir’s outlook.

Louie DiPalma also pointed out that even after a 70% drop, Palantir would remain the most expensive software stock in terms of valuation—a sign of extreme market exuberance.

Overall, Palantir’s recent drop is the result of an unsustainable valuation, broader economic anxieties, insider sales, and doubts about AI sector profitability and future government business.

Video: Yahoo Finance