Palantir shares are down 35% this year, putting the stock on track for its worst annual performance since a 65% drop in 2022.
Valuation remains the central drag: the stock still trades at about 130 times trailing earnings and roughly 80 times forward earnings despite the sell-off.
Investor attention has also shifted to other growth names, with Micron boosted by rising memory prices and SpaceX's recent listing offering fresher alternatives.
Palantir's business results have stayed strong—first-quarter revenue rose 85% to $1.6 billion and adjusted earnings increased 61%—but that growth has not been enough to justify its premium.
The disconnect between solid operating performance and a still-stretched valuation suggests the shares could face further pressure even after this year's decline.