Palantir (PLTR) stock fell more than 9% in afternoon trading on Tuesday, putting shares on track for their fifth-straight losing session as investors continue to rotate away from some of the hottest tech names that have powered stocks to all-time highs in 2025.
Palantir stock rose more than 150% from its April low through its second quarter earnings report, which saw the company’s revenue top $1 billion in a single quarter for the first time. Data from market data provider Barchart showed Tuesday’s slide would mark Palantir’s longest losing streak since March.
Palantir was also under pressure after a bearish report by short-seller Citron Research published Monday predicted a price target of $40. The firm’s founder, Andew Left, called the target “generous.”
Citron said it derived its price target based on comparing Palantir to OpenAI’s (OPAI.PVT) recent $500 billion valuation as the ChatGPT giant looks to sell several billion dollars of stock.
Palantir is not alone in seeing some investors move away from the stock in recent days.
The Technology Select Sector SPDR Fund (XLK), which tracks technology stocks, was down more than 1.5% in mid-day trading on Tuesday. AI superstar Nvidia (NVDA) was down more than 3%, its chip rival AMD stock fell more than 5%. Meta (META) — which has thrown huge sums of CapEx into AI talent retention — saw shares down 1.8%.
The tech sector as a whole has lost more than 2.5% over the last 5 sessions.
The pressure on AI names comes at a moment when the broader market rally is starting to show signs of rotation beyond Big Tech.
After months of concentration in a handful of growth giants, sectors like Healthcare (XLV) and Homebuilders (XHB), along with small- and mid-cap stocks, have taken on a larger role in driving this summer’s move to record highs.
On Tuesday, leadership was concentrated in more defensive corners of the market, with Real Estate (XLRE), Utilities (XLU), Materials (XLB), Consumer Staples (XLP), and Healthcare among the biggest gainers.
But given Big Tech’s outsized weighting in the index, if the group isn’t leading, gains in the S&P 500 are unlikely to be as sharp or one-sided as they’ve been over the past two years — a dynamic on display in Tuesday’s trading.
The tech-heavy Nasdaq was also taking on the heaviest losses, falling nearly 1.5% in afternoon trade.
Some strategists, however, see this shift as a healthier sign for markets.
Citi strategist Scott Chronert framed the moment as “two parallel paths” for the S&P 500 — one still led by AI-fueled growth giants and the other increasingly supported by more traditional, economically tied sectors.
“The simple answer is that we see ongoing Mega Cap Growth participation, if not leadership, but with fundamental and performance broadening creating a more durable structural setup,” Chronert wrote in a Friday note.
“The healthiest path to higher index levels is a combination of Growth/Tech leadership persisting but with other areas of the market additive more so than has been the case this past year.”
Click here for in-depth analysis of the latest stock market news and events moving stock prices
Read the latest financial and business news from Yahoo Finance