Palantir Falls For Fifth Straight Session. Is Party Over For Hot AI Stocks?

Shares in Palantir Technologies (PLTR), an artificial intelligence stock, dipped again on Tuesday marking the fifth straight session. With Tuesday's retreat, Palantir stock is down almost 17% from its all-time high. Other AI stocks, such as Nvidia (NVDA) and Credo Technology (CRDO), also fell on Tuesday along with the Nasdaq composite.

On the stock market today, Palantir stock fell 9.4% to close at 157.75.

Shares in the maker of data analytics software are still up 110% in 2025. Short seller Andrew Left, founder of Citron Research, last week said he's betting against further gains for Palantir stock amid its lofty valuation.

In another development, the chief executive of well-funded, fast-growing AI startup OpenAI on Monday said an AI "bubble" could soon burst.

"Are we in a phase where investors as a whole are overexcited about AI?," said OpenAI CEO Sam Altman. "My opinion is yes."

Palantir stock has gained amid views that the company seems poised to win more U.S. government business during the Trump administration. Also, retail investor enthusiasm for generative artificial intelligence plays has lifted Palantir stock, although commercial-related revenue has yet to ramp up.

Palantir Stock All-Time High

Shares hit an all-time high of 190 on Aug. 12. But a rotation out of some hot AI stocks could be underway.

"Without taking any single-company views, we continue to hold a strong conviction in AI's long-term growth. But the latest rotation reinforces our view that investors should seek a more balanced positioning in the near term across the AI value chain, including exposure to AI laggards such as internet and software companies and China's tech sector," said Ulrike Hoffmann-Burchardi, UBS global head of equities, in a report.

Nvidia stock fell 3.5% to 175.64 on Tuesday. Further, Nvidia is the leading maker of AI accelerators. Nvidia stock has gained 32% in 2025. Second quarter earnings for Nvidia stock are due Aug. 27.

Another hot AI stock, CoreWeave (CRWV), also has pulled back. CoreWeave stock has advanced 128% this year but shares plunged following the expiration of its IPO lock-up and earnings report.

CoreWeave stock hit an all-time high on June 20, with shares up 367% at that point. Further, CoreWeave is a new AI cloud services provider that rents out Nvidia GPU-equipped servers. On Tuesday, CoreWeave stock fell 4% to near 92.89.

Meanwhile, the iShares Expanded Tech-Software Sector ETF (IGV), an industry index that includes Microsoft (MSFT) and many big-cap software companies, has been sliding since July 29. The IGV index slipped 2.6% to near 106 on Tuesday. The IGV index has advanced 6.6% in 2025.

There's growing investor angst over the "per seat" licensing business models of some software companies if artificial intelligence results in the elimination of jobs. Companies adopting AI tools aim for productivity gains. But if AI means fewer staff that could results in fewer people using software, according to the bearish view.

Citron Takes Aim At Palantir

Citron's Left on Monday followed up with a new Palantir report. It compared Palantir's valuation to privately-held OpenAI, the leader in building generative AI models.

Current and former OpenAI employees plan to sell approximately $6 billion worth of shares to an investor group in a deal that values the startup at $500 billion, according to a Bloomberg report.

"Bloomberg consensus pegs Palantir's 2026 revenue at $5.6 billion. At OpenAI's lofty 17 times multiple, that implies 40 per share. But here's the problem: even that price would leave Palantir among the most expensive SaaS names in history if Palantir trades at the same 17 times price-to-revenue multiple," Left said.

He added: "This means that at 40 per share, Palantir would still be expensive. Let's ask the real question: Does Palantir deserve to trade at the same multiple as OpenAI? Which company is more defensible? What are traders ignoring?"

Palantir Stock Technical Ratings

Further, Palantir stock advanced 340% in 2024, with much of the gain coming after Donald Trump's Presidential election win.

Meanwhile, Palantir's Relative Strength Rating stands at 98 out of a best-possible 99.

PLTR stock holds a B+ Accumulation/Distribution Rating. That rating analyzes price and volume changes in a stock over the past 13 weeks of trading. A+ signifies heavy institutional buying; E means heavy selling. Think of a C grade as neutral.

Also, Palantir stock holds a Composite Rating of 98 out of a best-possible 99, according to IBD Stock Checkup. IBD's Composite Rating combines five separate proprietary ratings into one easy-to-use rating. The best growth stocks have a Composite Rating of 90 or better.

Palantir stock has a 21-day ATR of 3.92%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks that tend to make large jumps or dives in daily action, the kind that can trigger sell rules and shake investors out of a stock, have a high ATR. Stocks that tend to make more incremental moves have lower ATRs.

IBD suggests stocks with ATRs of up to 8%.

As it stands, Palantir stock needs to forge a new base to be actionable.

Follow Reinhardt Krause on X, formerly Twitter, @reinhardtk_tech for updates on artificial intelligence, cybersecurity and cloud computing.

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