Palantir Technologies (NASDAQ: PLTR) stock tumbled more than 6% to nearly $120.35 in midday trading, with shares touching a 52-week intraday low of $119.76 during the session.
The decline adds to a brutal stretch for the data analytics company, with Palantir stock now down over 30% in 2026 after years of extraordinary gains.
The selloff comes as software stocks broadly face a double threat from rising interest rate expectations and growing fears over AI-driven competition from firms like OpenAI and Anthropic.
Bank of America has stated it expects the Federal Reserve to hike rates three times this year, a projection that has rattled high-growth software companies dependent on favorable borrowing conditions.
Higher interest rates reduce free cash flow valuations, making premium-priced growth stocks like Palantir particularly vulnerable to shifts in monetary policy sentiment.
Adding to investor concern, a Reuters report revealed that France’s domestic intelligence agency plans to replace Palantir’s tools with software from French rival ChapsVision, though the transition could take several years to complete.
The potential contract loss matters because Palantir relies heavily on large government and international agreements as a core driver of its revenue growth and long-term expansion strategy.
The iShares Expanded Tech-Software Sector ETF (IGV), which includes major players such as Microsoft, dropped over 2% on the same day, reflecting broad weakness across the software industry.
The software index has now declined 18% in 2026, as investors reassess valuations across the sector amid the accelerating rise of AI-native competitors reshaping enterprise software markets.
Palantir did report March-quarter earnings and revenue that beat Wall Street consensus estimates, with particular strength noted in its U.S. government business, though U.S. commercial sales slightly missed expectations.
Bearish analysts continue to argue that despite strong and accelerating revenue growth, Palantir’s valuation and trading multiple remain well above historical comparisons for comparable software companies.
PLTR stock currently holds an Accumulation/Distribution Rating of E, signaling heavy institutional selling, alongside an IBD Composite Rating of just 46 out of a best-possible 99, according to IBD Stock Checkup.
The current downturn marks a sharp reversal from a remarkable multi-year run in which Palantir stock surged 135% in 2025, 340% in 2024, and 167% in 2023.
