Palantir Shares Plunge Amid Valuation Concerns and Market Rotation

New York, NY — Palantir Technologies Inc. shares fell more than 11.79% on Tuesday, August 19, 2025, closing around $153.51. This marks the company’s longest losing streak since March, with five consecutive days of losses amid growing valuation concerns. Despite record revenue exceeding $1 billion in its recent earnings report, the decline signifies a broader cooling off in the tech sector.

In a blistering critique, short seller Citron Research set a $40 price target on Palantir, describing it as ‘detached from fundamentals.’ Citron’s founder Andrew Left likened the valuation to that of OpenAI’s recent $500 billion pricing, arguing Palantir’s current market cap may not be justified by its growth.

This drop reflects a significant shift in investor sentiment, as money flows away from high-profile tech stocks due to concerns over inflated valuations. Other tech giants like Nvidia and Meta have also experienced declines as investors diversify into cyclicals and defensive sectors.

The Technology Select Sector SPDR Fund (XLK) fell more than 1.7% on Tuesday. In the past week, the tech sector has lost 2.4%, contributing to a 0.5% decrease in the S&P 500. Meanwhile, sectors such as health care and homebuilders gained traction, indicating a shift in market focus.

Market strategists view this rotation positively, suggesting it could foster a more resilient bull market. However, caution persists, with analysts expressing doubts about Palantir’s ability to sustain its premium valuation amid potential growth challenges. Among eight analysts, only two maintain ‘buy’ ratings, while six recommend ‘hold.’

As Palantir seeks to prove its ability to translate AI-driven growth into sustainable profits, it faces critical scrutiny. Observers warn that any misstep in quarterly reports could trigger a larger sell-off, especially as short interest increases. The coming days will be crucial for Palantir, as it aims to stabilize its position in an increasingly uncertain tech landscape.