Shares of Palantir Technologies Inc. (PLTR) are down over 3% due to a software sector sell-off. The AI software provider saw a 135% rise in 2025 and 340% in 2024. Despite strong earnings, the stock is down 26% year-to-date and 36% from its all-time high. CEO Alex Karp defends the sector.

Palantir reported fourth-quarter adjusted earnings of 25 cents per share, beating estimates. Revenue rose 70% to $1.41 billion, with U.S. revenue accounting for 76%. The U.S. government and commercial segments both surpassed analyst forecasts. The Army and clients like Airbus and Morgan Stanley contributed to revenue growth.

However, investors are shifting away from Palantir due to valuation concerns and AI impacts. Analyst Ed Ponsi is “breaking up with Palantir” as the stock’s technicals weaken. Ponsi previously recommended Palantir at $35/share in 2024. The stock’s failure to climb above key levels and moving averages crossing signal a bearish trend.

As Palantir’s momentum fades, some investors are concerned about the impact of AI on software providers. Despite strong earnings and revenue growth, the stock has declined significantly from its peak. CEO Alex Karp defends the software sector, emphasizing the importance of grounding AI models in real-world applications.

Read more at Yahoo Finance: Veteran trader makes eye-popping call on Palantir amid software slump