Shares of Palantir Technologies Inc. (PLTR) are down more than 3% over the past week, driven by a broader sell-off in the software sector.
The AI software provider has been one of the hottest AI names, with the stock soaring 135% in 2025 and 340% in 2024, driven by surging demand for its AI software and record revenue growth, along with heavy retail investor buying.
But now, Palantir’s momentum is fading. The pullback didn’t stop, even after the company delivered strong quarterly earnings that beat expectations in early February.
As of Feb. 13, Palantir stock is down roughly 26% year to date.
Palantir develops data analytics and AI software platforms, including Gotham, Foundry, Apollo, and Palantir Artificial Intelligence Platform, helping organizations analyze complex data.
On Feb. 2, Palantir reported strong earnings results, driven by strong demand from corporate customers and U.S. government contracts.
Related: Top analyst sends blunt message on battered software stocks
Adjusted earnings for the fourth quarter came in at 25 cents per share, ahead of the 23-cent consensus. Revenue rose 70% year over year to $1.41 billion, beating Wall Street estimates of $1.33 billion.
U.S. revenue accounted for 76% of the total, with the government segment generating $570 million (up 66% year over year) and the commercial business $507 million (up 137% year over year) for the quarter. Each came in ahead of the analysts’ forecast.
The U.S. Army played a key role in contributing revenue. In July 2025, the company was awarded a deal worth up to $10 billion with the Army. But Palantir doesn’t rely only on the U.S. government. Its commercial clients include Airbus, Morgan Stanley, and Merck KGaA.
Demand from those clients is so strong that Palantir repeatedly raised its financial outlook in 2025.
But some investors are now shifting away from Palantir stock, due to its elevated valuation and concerns about how AI could impact software providers.
Palantir CEO Alex Karp defended the software sector in a February letter to shareholders.
“The large language models alone will not lead us to salvation,” Karp said. “The strings of text produced by the language models are little without a software architecture that can lend a grammar and structure to the output of these probabilistic prediction engines.
“The models must be tethered to objects in the real world, and it is that tether, that means of grounding and orientation, that we have built.”
Palantir stock is down roughly 36% from its all-time high of $207 reached on Nov. 3, 2025, according to Morningstar’s data.
Ed Ponsi, managing director of Barchetta Capital Management, says he is “breaking up with Palantir” as the stock’s technicals turn weaker.
Ponsi successfully recommended Palantir at $35 a share in September 2024 and added more at $43, bringing his average cost to about $39 for a gain of roughly 246%.
Related: Palantir finally gets a Pentagon green light Wall Street can’t ignore
“Now it’s time to say goodbye,” Ponsi wrote in a note published on TheStreet Pro on Feb. 12.
“Palantir has broken down from a large rounded top, and has failed to climb back above a key former support level of $150. The stock is trading below its 50-day and 200-day moving averages, which appear destined to cross,” Ponsi wrote, adding that “all of this is happening as the major indexes flirt with all-time highs.”
The 50-day and 200-day moving averages are important technical indicators. “When a former high-flyer breaks them, especially while the broader market is strong, it might be time to break up with that stock,” Ponsi said. He no longer holds any Palantir shares.
Related: Cathie Wood sends blunt 3-word message on stock outlook in 2026
This story was originally published by TheStreet on Feb 15, 2026, where it first appeared in the Investing section. Add TheStreet as a Preferred Source by clicking here.
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