Why Palantir Stock Plummeted This Week

Palantir (NASDAQ: PLTR) stock saw another series of big valuation pullbacks this week. The software specialist's share price closed out the period down 15.9% from the previous week's market close, according to data from S&P Global Market Intelligence.

Palantir's valuation sank early in the week's trading as investors continued to digest potential macroeconomic risk factors from tariffs and other catalysts. The company's share price then saw another big sell-off on the day of trading following Nvidia's fourth-quarter report.

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Palantir stock pulls back on macro risks

Palantir's stock started this week's trading off with a day of sell-offs as investors reacted to news that the Trump administration plans to go forward with plans to enact new tariffs on Mexico and Canada. Shares also pulled back in conjunction with news that the administration intends to introduce new export restrictions that would prevent certain categories of semiconductors and chip-manufacturing equipment from being sold to China.

Palantir and other AI stocks sank after Nvidia's Q4 report

AI stocks got hit with big sell-offs after Nvidia published its Q4 results on Wednesday. The results were actually better than expected, and nothing immediate in Nvidia's report signaled headwinds for Palantir. However, the artificial intelligence (AI) chip leader highlighted uncertainty surrounding potential chip export restrictions in its earnings call.

Investors are already struggling to value growth-dependent AI stocks, and the potential for escalating international tensions surrounding artificial intelligence adds additional risk factors. The overall tech category is relatively new, and questions about business- and industry-specific growth outlooks have been combined with macroeconomic concerns to drive sell-offs in the category.

On the heels of its recent pullback, Palantir's stock is now down roughly 32% from its high. Despite some recent big sell-offs, the company is still valued at approximately 152.5 times this year's expected earnings and 52.6 times expected sales.

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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia and Palantir Technologies. The Motley Fool has a disclosure policy.